Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

INVERNESS HARBOUR (CITADEL QUAY, &c.) ORDER CONFIRMATION BILL

INVERNESS HARBOUR ORDER CONFIRMATION

Read the Third time and passed.

CITY OF ABERDEEN DISTRICT COUNCIL ORDER CONFIRMATION BILL

Read a Second time; to be considered tomorrow.

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

Hong Kong

Mr. Watkinson: asked the Secretary of State for Foreign and Commonwealth Affairs if Her Majesty's Government intend to review their policy towards Hong Kong.

The Minister of State for Foreign and Commonwealth Affairs (Mr. David Ennals): Her Majesty's Government's policy is to administer Hong Kong in the interests of those who have chosen to live there. The way in which this policy can best be implemented is naturally kept under review. My right hon. Friend will have a first-hand opportunity to examine the situation when he visits Hong Kong in early May.

Mr. Watkinson: Does my right hon. Friend agree that under the cover of vast wealth in Hong Kong lurk areas of human deprivation in relation to the right to vote, social conditions and civil rights? Is not that a disgrace for this or any other Government? Will my right hon.

Friend the Foreign and Commonwealth Secretary take the opportunity when he visits Hong Kong to discuss the value of the £40 million defence commitment to the colony?

Mr. Ennals: Certainly my right hon. Friend will be looking at conditions widely. The Hong Kong Government have had formidable problems dealing with the social conditions in the territory, particularly in absorbing large numbers of immigrants from China. The population of Hong Kong has increased sevenfold. It is a major task, but progress is being made, particularly in the planning of a long-term programme for social welfare.

Sir Anthony Royle: Does the right hon. Gentleman agree that Hong Kong must be looked at in the Asian context? The colony has made great progress over the past two or three years in a period when the world has faced grave economic crises. Will he give the House an assurance that Her Majesty's Government will support the Hong Kong Government in their efforts?

Mr. Ennals: Yes, I certainly give that assurance. The people of Hong Kong expect it. It is true that Hong Kong's record in a variety of respects compares favourably with that of other parts of Asia, but we are aware of deficiencies. The Governor is closely in touch with us, and the Hong Kong Government are doing all they can.

Mr. James Johnson: Does not my right hon. Friend agree that Hong Kong is unique among those few dependencies left to be administered in the old Empire? has he studied the Fabian pamphlet by Joe England? If so, will he comment on the suggestion, which has been made in the House before, that although there are not direct elections to the Legislative Council, we should nominate as members of the urban council some who have been elected in some shape or form by the people on the pavements?

Mr. Ennals: I have seen that pamphlet. It contains some important ideas which we are examining. The Governor himself has said that there is room for change in the Legislative Council while retaining its essential balance. There is value in having a broader cross-section of the life of Hong Kong represented.

Mr. Tugendhat: Does not the right hon. Gentleman agree that the Governor and the whole of the Hong Kong Government recognise the need to associate the people of the colony as closely as possible within the framework of government? Does he not agree that they have done magnificent work in building up substitutes for democracy by neighbourhood councils and so on? It is Communist China more than anything else which makes progress difficult.

Mr. Ennals: It has to be recognised that Hong Kong's geographical and constitutional position—and it is obviously not moving towards independence—create problems which are almost unique. We have great confidence in the Governor and those who advise him.

Spain

Mr. Grylls: asked the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet the Spanish Foreign Minister.

The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): On 2nd March in London.

Mr. Grylls: When the right hon. Gentleman meets the Spanish Foreign Minister again, will be give him some encouragement and sympathetic understanding of Spain's desire to join the EEC and to the possibility of Spain's joining NATO—although admittedly that is in the future? Does not the right hon. Gentleman agree that the steps taken towards democracy in Spain are important, but must be encouraged and allowed to proceed at their own pace?

Mr. Callaghan: I certainly agree that the Spanish Government should be encouraged in their plans for liberalization, particularly in relation to the introduction of such rights as universal suffrage and free collective bargaining. It will be interesting for me to hear the views of the Spanish Foreign Minister on these matters, and that will help me to determine what the view of Her Majesty's Government should be in relation to both the EEC and NATO.

Mr. Dalyell: Is my right hon. Friend in a position to say anything about contracts with Socialist parties in Spain?

Mr. Callaghan: I had contact with the Socialist parties in Spain in my capacity as Treasurer of the Labour Party when I went to Copenhagen recently for the conference of Socialist leaders. I was very encouraged by what they had to say and by their desire to change the framework, but to work within it without violence.

Sir A. Meyer: Will the right hon. Gentleman confirm that it is he and not the Secretary of State for Employment who is responsible for our relations with Spain?

Mr. Callaghan: Yes, Sir. My right hon. Friend, whose record on behalf of freedom in Spain is well known and stands in marked contrast to that of the defenders of Franco Spain on the Benches opposite, consulted me before he made his speech, and I was very happy for him to say what he said.

British Caribbean Territories

Mr. Lane: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the progress of British Caribbean territories towards independence.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Edward Rowlands): Constitutional advances have been or are being introduced in Montserrat, Anguilla, the British Virgin Islands and Turks and Caicos. The Premiers of the West Indies Associated States recently agreed amongst themselves that they should seek full independence at an early date. Preliminary discussions on this are now taking place with the Premiers.

Mr. Lane: Would not the hon. Gentleman agree that it may be wise to make haste slowly in giving independence to some of the smaller islands if these territories are to have the best chance of political and economic prosperity after independence?

Mr. Rowlands: We shall proceed at the pace at which the islands themselves wish to proceed.

Mr. Marten: What is the precise position about Anguilla these days?

Mr. Rowlands: The Anguilla constitution is now in force. If there are any further discussions about independence


for St. Kitts and Nevis, the question of Anguilla will have to be taken into account and the wishes of the islanders will be respected.

Rudolf Hess

Mr. Townsend: asked the Secretary of State for Foreign and Commonwealth Affairs what reply he has received from the Union of Soviet Socialist Republics concerning the release of Rudolf Hess from Spandau Prison.

Mr. James Callaghan: The Soviet Embassy has now made clear that the Soviet response to our recent representations on the release of Rudolf Hess is negative.

Mr. Townsend: Is the right hon. Gentleman aware that this vindictive and intransigent attitude of the Soviet Government will be deeply deplored by hundreds of thousands of people in the Western world? Will he consult the French and Americans about reducing the absurdly large size of the military guard at Spandau Prison?

Mr. Callaghan: Both the French and American Governments made parallel representations to the Soviet authorities. I inquired into the extent of the guard when I was in Berlin recently. I understand that, taking into account the four countries concerned, there are 20 warders and 104 soldiers, who take it in turns in their tours of duty one month in four to guard this one man. But I see no prospect of a change in the situation at the moment.

Mr. Maudling: Does the right hon. Gentleman consider that this attitude by the Russian Government is consistent with the spirit of Basket III of the Helsinki Conference?

Mr. Callaghan: I do not think that it has anything to do with Basket III of the Helsinki Conference. The imprisonment of Rudolf Hess arises from agreements made at the end of the war, and we should depart from any one of them at our peril, because in doing so we might upset others.

Angola

Mr. Hal Miller: asked the Secretary of State for Foreign and Commonwealth Affairs whether his discussions with the Government of the People's Republic of

China will include the possibility of developing a joint approach to counter Soviet threats to world peace in Angola and elsewhere.

Mr. James Callaghan: As I told the House on 28th January, I hope in Peking to have wide-ranging discussions of the international situation. As regards Angola, our normal criteria for recognition are now met. We have decided to recognise today the People's Republic of Angola and its Government in Luanda.

Mr. Miller: Will the right hon. Gentleman discuss with the Chinese their possible co-operation in containing further Soviet expansion in Southern Africa, recognising that that expansion is a threat to resources and communications, of which the Chinese have had great experience?

Mr. Callaghan: I cannot undertake to do that. It will be for the Chinese Government to decide what subjects they wish to raise with me. I do not think that I should wish to raise this matter with them.

Mr. James Lamond: Will my right hon. Friend bear in mind, if he discusses this matter with the Government of the Chinese People's Republic, that their attitude towards Angola, like the attitude of the Opposition, derives less from their concern about the people of Angola than from their hatred of the Soviet Union, and that therefore he should recognise that the Government of the People's Republic of China are acting as international opportunists?

Mr. Callaghan: I have advice from all quarters on these matters and I do not think that it is my responsibility today to enter into a discussion about the relationship between the Soviet Union and the People's Republic of China. We prefer to be on good terms with both.

Mr. Maudling: As the right hon. Gentleman has confirmed the report which appeared a short while ago on the tape, may I ask two questions about Her Majesty's Government's recognition of the MPLA? First, while clearly there are arguments for doing so, can the right hon. Gentleman find any precedent for accepting that a Government are in control of a territory when that control rests upon the presence of a large foreign


army? Secondly, what assurance did he receive from the MPLA before according recognition that it would respect the territorial integrity of the British colony of Rhodesia?

Mr. Callaghan: The right hon. Gentleman asks about circumstances in which recognition is conferred. This is a long-standing practice. It is
to recognise de jure a Government, established by revolutionary action, when Her Majesty's Government considers that the new Government enjoys…
and then the criteria are listed. Those criteria are quite clear. It is a matter of opinion, and in Her Majesty's Government's opinion there is little doubt, any more than there is in the minds of the rest of the members of the EEC, that the new Government
…enjoys, with a reasonable prospect of permanence, the obedience of the mass of the population and the effective control of much the greater part of the territory of the State concerned.
A distinction must be drawn between approval and recognition—there is a difference. It would be wrong for us to depart from our normal criteria in these matters.
As regards getting guarantees from the MPLA, we are not likely to get any guarantees from anyone until we recognise them as the Government, but if it seems appropriate to discuss this matter with the new Government I will do so.

Argentina (Mr. and Mrs. Whitecross)

Mr. Newton: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on the progress of his efforts to secure the release of Mr. and Mrs. White-cross from detention in Argentina.

Mr. Rowlands: We have continued to urge upon the Argentine authorities the desirability of an early decision on the applications for expulsion made by Mr. and Mrs. Whitecross on 10th December.

Mr. Newton: Is the hon. Gentleman aware that Mr. Whitecross's parents, who live in my constituency, would wish me to thank our representatives for the efforts they have made so far? Can the hon. Gentleman confirm that the Argentine Government's present detention powers in this respect run out on 10th March? Will

he convey to the Argentine Government this House's hope that Mr. and Mrs. Whitecross will be free well within that period, and that this could play a useful part in helping to improve relations between our two countries?

Mr. Rowlands: I thank the hon. Gentleman for what he has said. Our consul in Buenos Aires has done everything possible to help Mr. and Mrs. Whitecross, and particularly in the family's domestic circumstances here. The 60-day rule expires on 10th March, and only yesterday I made direct representations to the Argentine charge d'affaires in London that the Argentine Government should release Mr. and Mrs. Whitecross as speedily as possible.

Mr. Hoyle: Will my hon. Friend continue to make representations in this regard for both Mr. and Mrs. Whitecross? I realise that one of the problems is that Mrs. Whitecross is an Argentinian. Will he continue to make representations for their release as speedily as possible so that they can come back to this country?

Mr. Rowlands: We have made representations on behalf of both Mr. and Mrs. Whitecross, although only Mr. Whitecross is a British citizen.

IRA (United States Funds)

Mr. Jessel: asked the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has made to the United States Government concerning the raising within the United States of funds used partly for the provision of weapons for the Irish Republican Army.

Mr. James Callaghan: I would refer the hon. Member to the reply which my right hon. Friend the Prime Minister gave to the hon. Member for Birmingham, Edgbaston (Mrs. Knight) on 10th February.—[Vol 905, c. 115–16.]

Mr. Jessel: As 85 per cent. of the weapons found in the possession of the IRA are of United States origin, will the Government step up their activities to make the facts of the situation in Northern Ireland known to the leaders of the Irish-American community in the United States and ask our American allies how they would feel if fund-raising took place


in Europe to raise money to buy weapons to kill Americans in America?

Mr. Callaghan: My information coincides with that of the hon. Member. About 85 per cent. of the weapons used by the Provisional IRA and recovered by security forces are manufactured in the United States. The hon. Member makes a good point in his last remarks. I understand that the principal fund-raising organisation in the United States is sometimes called NORAID. It is believed to be sending funds at the rate of about £100,000 a year. I do not think that that money goes to welfare or to helping the sick. We take every opportunity to make these facts known to American senators and congressmen as well as to the Administration.

Mr. Lee: If the Americans persist in giving assistance to the IRA in this way, have we not a very good answer? Could we not bundle American bases out of this country and tell them to keep out?

Mr. Callaghan: That would be an answer. It is the answer I would expect from my hon. Friend, but it is not one which the majority of the House would want to adopt.

Mr. Biggs-Davison: Is the right hon. Gentleman aware that we appreciate the efforts which both British and Irish Ministers have made, and are making, to end this infamous traffic? Is he also aware that the inclination of some of us enthusiastically to celebrate the bicentenary of the American Republic will be lessened if American citizens continue to be the paymasters and suppliers of the IRA?

Mr. Callaghan: I am grateful for what the hon. Member said at the beginning of his question. I have no reason to believe that any responsible opinion in the United States supports what is happening in this matter. It is up to all of us to redouble our efforts.

Mr. Dalyell: Although it is a lesser part of the problem, has my right hon. Friend been in touch with the Canadians on this matter?

Mr. Callaghan: The source of funds there is very much smaller.

Sir Nigel Fisher: Does the right hon. Gentleman agree that many Americans

of Irish descent give money to NORAID imagining that it will be spent for peaceful and compassionate purposes when in fact it goes straight to the gunmen? Will he invite Mr. Cosgrave, who, I understand, is to visit the United States in the near future, to reinforce his representations, as they may carry even more weight coming from the Republic?

Mr. Callaghan: I take note of what the hon. Member has said. I know that Ministers from the Republic have been very outspoken in their condemnation of these funds when they have visited the United States.

South Africa (Press Freedom)

Mr. Les Huckfield: asked the Secretary of State for Foreign and Commonwealth Affairs what advice is given by consular officials to British journalists in South Africa about South African law on Press freedom.

Mr. Ennals: Consular officials are not qualified, nor are they permitted, to interpret local law. None of our consular officials—or other members of the Diplomatic Service—in South Africa has been asked for or has offered advice about local legislation affecting Press freedom

Mr. Huckfield: Might not some of our consular officials explain to British journalists in South Africa that the Republic has such a managed news service that many South Africans will never know what is taking place in Angola? Could they not point to the example of Mr. Donald Wood, the editor of the East London Daily Dispatch, who found himself in prison for six months for writing a story about the South African Special Branch?

Mr. Ennals: The short answer is that journalists visiting South Africa should find out the facts for themselves. I am sure they do.

Rhodesia

Mr. loan Evans: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his meeting with Rhodesian African leaders.

Mr. James Callaghan: I was glad to accept a proposal from Mr. Nkomo that he should visit London from 1st to 5th


February during an adjournment in the current talks between himself and Mr. Smith. My discussions with Mr. Nkomo were wide-ranging and dealt with the political situation in Southern Africa generally as well as with the particular problem of Rhodesia. I have agreed with Mr. Nkomo that details of our discussions should remain confidential.

Mr. Evans: Does my right hon. Friend agree that time is running out for the illegal régime and that, if it does not have serious constitutional talks to meet the serious aspirations of the majority of the people in Rhodesia, it will be taken to the barricades? Does he also agree that, just as in the past a number of nations have refused to recognise this illegal régime, no one will get it out of the difficulties it gets itself into?

Mr. Callaghan: I have very recently pointed out my hon. Friend's general sentiments to those in control of Rhodesia at the present time.

Mr. McCrindle: Will the Foreign Secretary take this opportunity to clarify what would be the Government's reaction to the introduction of either Russian weapons or Cuban troops into Rhodesia before the Government have discharged their constitutional responsibility?

Mr. Callaghan: The Government would have a clear responsibility in Rhodesia provided the régime acknowledged Britain's authority, with all that that entails. I see no sign of that so far.

Mr. Luard: In view of the rather gloomy views expressed by President Kaunda about impending civil war in Rhodesia, would my right hon. Friend make known to Mr. Smith and the Rhodesian régime, by whatever means available to him, that there is a very urgent need to reach a settlement in the constitutional talks now taking place?

Mr. Callaghan: I am continuing to do this. One of my very senior and most trusted officials was in Southern Africa only 10 days ago and proceeded directly to Washington in order to discuss these matters. I can assure the House that, although it is not possible to make many public statements on this matter, the seriousness of the situation is being conveyed to Mr. Smith and the European

in Rhodesia and elsewhere. I trust they will take due note of it.

Mr. Hooson: In view of the potential danger of the situation in Southern Africa to the whole of the Western world, has the Foreign Secretary had discussions with his counterparts in NATO with a view to bringing influence to bear on the Smith régime to show that Rhodesia might act as a catalyst for the whole of Southern Africa and provide the circumstances for an explosion which could affect the whole of the Western world?

Mr. Callaghan: I have had many discussions both bilaterally and on a multilateral basis on this matter recently. I should like to make clear to Mr. Smith and those who follow him that the sure way to avoid the threat of bloodshed in Rhodesia is for the illegal régime to agree to meet the legitimate aspirations of the African majority and to do so very soon.

Mr. Robert Hughes: Will my right hon. Friend accept that it is the serious desire of everyone in the House that a peaceful solution should be reached on the Rhodesian constitutional issue and that the last thing we want is any further bloodshed? Will he convey to the South African Government that if they send troops into Rhodesia they will provoke the kind of backlash that will lead to a very serious loss of life? Is he aware that we are all certain that he will do everything possible to reach a settlement in Rhodesia?

Mr. Callaghan: I am grateful to my hon. Friend for what he said in the first part of his question. There is no doubt about the extreme gravity of the situation that Mr. Smith is facing. He has very little time left to come to an accommodation with Mr. Nkomo. That has been pointed out by me and by surrounding Governments in Africa on all sides of the question. I hope that he will soon meet Mr. Nkomo and give a positive response to his proposals.

Mr. Amery: I appreciate that it is right for the right hon. Gentleman to exercise the maximum pressure on Mr. Smith to come to terms with Mr. Nkomo, but will he make clear to Mr. Nkomo, and perhaps more widely, that, if the talks were broken off and the Africans


decided to resort to terrorism and invasion from Mozambique as the alternative method of settling the problem, we could not be a party to continuing sanctions in circumstances which would make us accomplices of the guerrillas?

Mr. Callaghan: The right hon. Gentleman referred to the Africans and not Mr. Nkomo deciding on guerrilla activity, and I think what he said is right. If only Mr. Smith would realise that Mr. Nkomo is probably the last chance he has of avoiding guerrilla activity which will spread until Rhodesia is engulfed! The future of sanctions in relation to a situation that might arise is a hypothetical question. I cannot say that sanctions would fall away unless the regime accepted a return to legality. That has always been the test.

Mr. Whitehead: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement about constitutional talks on the future of Rhodesia, and about recent contacts with Mr. Joshua Nkomo and Mr. Garfield Todd.

Mr. James Callaghan: The present situation in Rhodesia makes it vital that the opportunity to reach a peaceful settlement presented by the current talks between Mr. Smith and Mr. Nkomo is not missed. But I think we should respect the decision of the parties themselves to make no public comment for the present on the substance of the talks.
On the question of my discussions with Mr. Nkomo I would refer my hon. Friend to the answer I have already given this afternoon. I hope to meet Mr. Todd, who is an old friend, on a social occasion in the near future.

Mr. Whitehead: Does my right hon. Friend agree that, while Mr. Todd's conduct on his visit here has been exemplary, as the Rhodesian Herald said, he should be returned on 1st March not to detention but to the conference table? He is one of the few white people in Rhodesia trusted by the African majority. What steps is my right hon. Friend taking to ensure that that comes about?

Mr. Callaghan: I do not think that it would help Mr. Todd if I were to take any steps of that nature. I agree with my hon. Friend that Mr. Todd's wisdom could add a great deal to the reconcilia-

tion of the Smith régime with Mr. Nkomo.

Mr. Maudling: As the Foreign Secretary could not tell the House that be could get assurances from the MPLA before recognising it that it will respect the territory and constitution of Rhodesia, will he assure us that the Government are making contingency plans in case the Cuban troops present in Angola do not show such respect?

Mr. Callaghan: I suppose that question arises out of the subject of the future of Rhodesia. Certainly, the presence of Cuban troops, to which I drew attention as early as anyone, represents a potential danger to the neighbouring countries of Southern Africa. Although they may have been invited into Angola by the MPLA, they have certainly not been invited into any neighbouring countries. In our judgment, it would be by far the best thing if both the Cuban and the South African troops were to withdraw from Angola. Rhodesia's security and a good life for the people of Rhodesia will be best safeguarded if Mr. Smith and Mr. Nkomo come to an agreement on the basis of the six principles that were laid down many years ago.

Overseas Trade

Mr. Brocklebank-Fowler: asked the Secretary of State for Foreign and Commonwealth Affairs what new instruments he proposes to ensure that British exporters enjoy the maximum support from his Department in their search for profitable trade overseas; and if he will make a statement.

Mr. Ennals: My right hon. Friend announced on 14th January a special review of our overseas interests, requirements and representation. He will consider with my right hon. Friend the Secretary of State for Trade any recommendations which the Central Policy Review Staff may make in the field of overseas trade promotion.

Mr. Brocklebank-Fowler: I thank the right hon. Gentleman for his reply. Will the CPRS investigate the possibility of setting up a structure similar to that which covers the development division in the matter of trade to co-ordinate our trading activities in areas of continents rather than dealing with them separately on a country-by-country basis?

Mr. Ennals: That is an interesting proposal which the CPRS could well consider. My right hon. Friend will be putting forward ideas for consideration by the CPRS.

International Atomic Energy Agency

Mr. Robin F. Cook: asked the Secretary of State for Foreign and Common-wealth Affairs if he has received a copy of the December issue of the IAEA bulletin.

Mr. Ennals: Yes, Sir.

Mr. Cook: Has my right hon. Friend had an opportunity to consider the views expressed in that bulletin by Dr. Eklund, the Director General of the Agency, in which he suggests that the export of nuclear facilities should be confined to countries which are either parties to the Non-Proliferation Treaty or which accept safeguards on all nuclear installations? Will my right hon. Friend assure the House that the Government will press this Agency view in the course of the discussions in the Nuclear Suppliers Group?

Mr. Ennals: Yes, I give that absolute assurance. As my hon. Friend knows, we have been full participants in the Non-Proliferation Treaty and the Treaty Review Conference. Under Article 3(2) of the Non-Proliferation Treaty the United Kingdom and other countries may export source or special fissionable material to a non-nuclear weapon State only if that State has concluded a safe-guards agreement with IAEA. We shall press strongly both points raised by Dr. Eklund in that article.

Chile

Mr. Ovenden: asked the Secretary of State for Foreign and Commonwealth Affairs if he will now sever diplomatic relations with the Government of Chile.

Mr. Kilroy-Silk: asked the Secretary of State for Foreign and Commonwealth Affairs if he will now take steps to break off diplomatic relations with Chile.

Mr. James Callaghan: I would refer my hon. Friends to the written reply I gave to my hon. Friend the Member for Darlington (Mr. Fletcher) on 11th February.—[Vol. 905. c. 238.]

Mr. Ovenden: I appreciate my right hon. Friend's concern to do what he considers to be in the best interests of British citizens in Chile, but does he accept that it might be in their interests—and would certainly be in the interests of the people of Chile—if the Government gave an unequivocal demonstration that we as a civilised nation are no longer prepared to tolerate the total disregard for human rights shown by the Chilean régime?

Mr. Churchill: What about the Soviet Union?

Mr. Heffer: What about the Soviet Union? We know what goes on.

Mr. Churchill: We do not break off relations with the Soviet Union.

Mr. Speaker: Order.

Mr. Heffer: On a point of order, Mr. Speaker.

Mr. Speaker: Order. After Questions, if the hon. Member will be so kind.

Mr. Callaghan: I am grateful to you, Mr. Speaker, for giving me the chance to reply. I understand that my hon. Friend the Member for Gravesend (Mr. Ovenden) is anxious about these matters, and of course we keep them constantly in mind. The Chilean régime can be in no doubt about world opinion of the régime and the way it is carried on. Breaking off diplomatic relations would not help the Chilean political prisoners whom we are doing our best to assist at the moment, the refugees or the British subjects, of whom there are about 4,000 in Chile.

Mr. Kershaw: In view of the Chancellor of the Exchequer's present anxieties, has any estimate been made of the saving to the Foreign Office Vote which would be achieved by breaking off diplomatic relations with all the Governments of which hon. Gentlemen below the Gangway opposite from time to time dis-approve?

Mr. Callaghan: Yes, Sir, but there would be some compensating expenditure on a hostel for ex-ambassadors.

Mr. Kilroy-Silk: Given the nature of the despicable Fascist régime in Chile and its treatment of political prisoners, is not the only course of action we can


take to break off diplomatic relations and dissociate ourselves from that régime?

Mr. Callaghan: I have already answered that question. In my judgment it would not help British interests so to do.

Mr. Blaker: Is the right hon. Gentleman aware that the Opposition are glad that he does not intend to break off diplomatic relations with Chile? We hope that he will take the same robust line in response to the pressure he will no doubt get from his hon. Friends below the Gangway in relation to the Soviet Union.

Mr. Callaghan: I am grateful for what the hon. Gentleman said and I look forward to the great support that he will give me on the question of Angola.

Bantustans

Mr. Hooley: asked the Secretary of State for Foreign and Commonwealth Affairs what formal recognition Her Majesty's Government propose to accord to the Bantustans set up within the Republic of South Africa.

Mr. Ennals: The question does not arise because at present Her Majesty's Government regard the Homelands as forming an integral part of the Republic of South Africa. If a request for recognition as an independent State were to be received from a Homeland it would be considered against our well-established legal criteria for recognition and in the light of all the relevant circumstances at the time. We would have to be satisfied about the independence of such a territory including its handling of its external relations.

Mr. Hooley: Is my right hon. Friend aware that I hope the question will not be considered at all? Is he aware that both the United Nations and the Organisation of African Unity are totally opposed to the Bantustan policy? Could he explain why this country alone among almost all other countries has accepted a delegation of Bantustan leaders, who are paid nominees of the South African Government?

Mr. Ennals: We see the Bantustan policy as being an integtal part of apart-

heid, which the present Government have on many occasions strongly condemned. Therefore, we have condemned the policy of the Bantustan.
We have invited people from many parts of the world who are involved in many aspects of life. Our view is that it is better for them to come here to meet British people, to be confronted with the arguments, such as those of my hon. Friend, than being left in seclusion. We believe, therefore—and I think that they felt this—that open debate is better than restriction.

Mr. Russell Kerr: Let them resign their position first.

Mr. Tugendhat: Is the right hon. Gentleman aware that the Opposition absolutely agree that this issue should not be prejudged and that we should wait and see exactly how the Bantustans turn out? Does he agree that many of the leaders of the Bantustans have fought hard on behalf of the rights of their kinfolk in difficult circumstances and deserve encouragement and not disparagement?

Mr. Ennals: On the first part of the hon. Gentleman's question we have to await a decision. That decision may well arise fairly soon if the Transkei is declared independent in October, so it is a fairly urgent issue.
I had the opportunity of meeting the visitors. I spoke frankly about the views of Her Majesty's Government. It is interesting that they also made criticisms of the policies of the South African Government and said that they had no objection to my making that fact public.

Oral Answers to Questions — EUROPEAN COMMUNITY

Young People

Mr. Steen: asked the Secretary of State for Foreign and Commonwealth Affairs what is his policy towards promoting better relations between young people within the Common Market.

Mr. Ennals: We consider it important that relations among young people in Common Market countries should improve, in a spirit of co-operation and understanding. To this end Her Majesty's Government encourage and actively support exchanges and contacts


between British and other European youth.

Mr. Steen: What steps are the Government proposing now that the Heath-Pompidou funds are at an end, the Rippon package is exhausted and the Helsinki Basket has not yet started to be filled? Will the Minister reverse his disastrous policy on reducing grants payable to the British Youth Council and opting out of the European Youth Foundation, which policy, if he continues to pursue it, will result in British youth being splendidly isolated?

Mr. Ennals: I was not quite certain whether the hon. Gentleman said that Rippon was exhausted or that the funds were exhausted. However, I should like to point out that we shall be spending in the financial year 1976–77 a total of £176,000 on youth exchanges with Common Market countries. Certainly the figure for the following financial year is reduced, but not surprisingly so in view of demands for the limitation of public expenditure, coming particularly from the Opposition Benches.
On the proposed EEC youth policy, we have conferred widely with voluntary organisations in this country and we are now considering the Government's position.

Mr. Heffer: Does my right hon. Friend agree that it is much better if Governments try not to get youth together artificially but to do as the Liverpool Trades Council did long before there was a Common Market or even discussions about a Common Market—to have an exchange of young trade union workers between West German trade unions and Liverpool workers? Could not this idea be extended to all sections of the working-class movement in Britain?

Mr. Ennals: I am ready to pay my tribute to the Liverpool Trades Council at any available opportunity. I agree with my hon. Friend's view. The more trade unionists can be involved in exchange schemes, the better. A good deal of the money concerned is involved not in Government-sponsored projects but in assisting projects which have been put up by voluntary organisations.

Mr. Speaker: I believe that the Liver-pool Trades Council has brief questions and answers.

Mrs. Bain: Does the Minister agree that one way of improving relations between young people in Europe would be to grant all of them equality of opportunity? In this context will he please study the report called "Euroscot", which is published by the Scottish Standing Conference of Voluntary Youth Organisations and which shows that young Scots are seriously disadvantaged in economic factors as compared with their European counterparts?

Mr. Ennals: I have not seen that report. If the hon. Lady will send me a copy, I shall be glad to see it.

Direct Elections

Mr. Dykes: asked the Secretary of State for Foreign and Commonwealth Affairs whether the Government have now fixed a date for the publication of their planned White Paper on European direct elections.

Mr. James Callaghan: A Green Paper entitled "Direct Elections to the European Assembly" was published yesterday.

Mr. Dykes: Does the Secretary of State agree that that paper could only be described as disappointing, negative and defeatist? It is not a White Paper, as expected originally, with green edges. It is not even a Green Paper. It is simply a yellow paper. The Government are setting the clock back with their proposals and are proceeding right from the beginning again. Does the right hon. Gentleman agree that more progress should have been made and that the paper does not deal with any of the more important questions? Does he agree that at least the Government should now reaffirm that 1978 is the target for direct elections to the European Parliament?

Mr. Callaghan: That was a series of generalised observations to which I think the answer basically is "No, Sir." The purpose of the paper is to bring before the House of Commons and the public generally the questions which must be resolved in this very important matter. Those questions are there outlined. I hope that a debate will be arranged. I have already said that I am willing to meet any of the parties wishing to discuss the matter, and we can proceed from there to the European Council on 1st April.

Mr. Spearing: Does my right hon. Friend agree that, because the future powers of the European Assembly are unknown, the constitutional implications of direct elections are very considerable? As these implications are not discussed in the Green Paper, would it not be a good idea to present another document outlining the possible constitutional effects of direct elections?

Mr. Callaghan: I am not an astrologer and cannot foretell the future. The powers of the Assembly, such as they are at present, are set out in the Green Paper as published. It is on this that the issue will be decided. If this Parliament decides to transfer any further powers at a later time, it will be for it to do so in due course as it thinks wise. There is no point in trying to anticipate what is going to happen in these matters when no one's opinion on the subject can be valid.

Mr. Russell Johnston: Will the right hon. Gentleman explain why it is that in a Green Paper remarkably free of assertion the Government choose to emphasise that they see an advantage in coinciding European Parliament elections with local government elections in May? One would have thought that to confuse two very different levels of government would be a mistake.

Mr. Callaghan: That is probably a matter for debate, but basically it is the case that most if not all of the countries would prefer the elections to be held in May or June. I cannot envisage canvassers exhausted by local government elections then coming out for another three weeks "on the knocker" for European Parliament elections. Subject to discussions in the House, my view is that if we run them both together we shall probably stand a better chance of getting a decent vote.

Mrs. Dunwoody: As a practical politician, my right hon. Friend must know that we shall have great difficulty in getting anyone to take an interest in direct elections, particularly when they cover about 10 constituencies. As far as I am aware, there is no indication of what extra powers this Assembly will have after direct elections. Will the Government at least take greater pains to explain to people what they have in mind after direct elections?

Mr. Callaghan: This is a hobgoblin. The powers of the Assembly are laid down. They are there fixed by statute. Only this and the other Parliaments can transfer further powers to it. I do not see that we can go into that position at present when no one knows what further powers are to be transferred, or, indeed, if I read my colleagues aright, whether anyone will want to transfer further powers.
I have certainly never been given to underrating the difficulties of this operation, but to underline the difficulties sometimes means that one is accused of trying to sabotage. On the contrary, we have a treaty obligation. We intend to carry it out, and in carrying it out it is my responsibility to point out the difficulties.

Mr. Hurd: Does the right hon. Gentleman accept that although there will certainly be dissenting voices, and although we are disappointed with some of the content, or lack of content, of the Green Paper, the Opposition have for some time accepted the principle of direct elections to the European Parliament—[HON. MEMBERS: "No."] I was glad that I referred to "dissenting voices". We have for some time accepted the principle of direct elections to the European Parliament as a welcome and necessary strengthening of democratic control in the Community.

Mr. Callaghan: This looks like being a diverting controversy. Hon. Members opposite should be kind to their Front Bench, which is in enough distress as it is.
In the first instance it seemed that, as there was obviously a little controversy, it was as well to set out in the paper the issues and the questions to which hon. Gentlemen would have to address their minds before coming out with a clear picture of the Government's policy on them. Otherwise, I should have been roundly accused of trying to dictate.

Mr. Speaker: We cannot debate that matter now.

Spain

Mr. Arnold: asked the Secretary of State for Foreign and Commonwealth Affairs what further progress has been made towards a further revision of the EEC's relationship with Spain; and if he will make a statement.

Mr. James Callaghan: The Council of Ministers agreed on 9th February to a resumption of the trade negotiations with Spain suspended last year. Relations on a broader basis will depend on the course of developments in Spain.

Mr. Arnold: I recognise that we are not solely responsible for the formulation of policy in the EEC towards Spain. Will the Foreign Secretary none the less again reassure the House that the Government will make every effort to encourage the new Spanish Government to become our partners in Europe?

Mr. Callaghan: I think I answered that question earlier this afternoon. I repeat, it must depend on the extent to which Spain moves in a democratic direction, looks to universal suffrage, and gives the opportunity for free collective bargaining to trade unions in that country.

Mr. Roy Hughes: Does my right hon. Friend agree that at present Spain is still very much a police State? Does he further agree with the sentiment, expressed at that great rally in London last Saturday, that before there can be any closer relationship with Spain it must be made into a fully democratic State?

Mr. Callaghan: I think that the last part of my hon. Friend's supplementary question repeated what I have just said.
We have a choice between uttering outright condemnations on every opportunity and trying to ensure the success of the manifold forces in Spain which are working for a return to democracy. I choose the latter. That is in the best health of Europe and of the Spanish people themselves. But my hon. Friend is right about there being a long way for Spain to go before it can in any sense be counted as a democracy.

Council of Ministers

Mr. Peter Morrison: asked the Secretary of State for Foreign and Commonwealth Affairs when he next proposes to meet his EEC colleagues.

Mr. Tim Renton: asked the Secretary of State for Foreign and Commonwealth Affairs when he next proposes to meet his EEC colleagues.

Mr. Blaker: asked the Secretary of State for Foreign and Commonwealth

Affairs when he next expects to meet the other Foreign Ministers of the EEC.

Mr. Ennals: At a ministerial meeting on political co-operation in Luxembourg on 23rd and 24th February.

Mr. Morrison: When the Minister meets his EEC colleagues, will he raise the subject of the appallingly high unemployment figures which obtain in Britain at the moment? What help does he expect from his EEC colleagues to alleviate the situation?

Mr. Ennals: My right hon. Friend has already referred to this matter publicly and has urged the Commission to make a study of it. There are a number of Community countries whose unemployment problems are substantially more serious than our own. Therefore, it is a common problem within the Community.

Mr. Dalyell: My right hon. Friend the Foreign Secretary said that he was not an astrologer. However, do the Government foresee great difficulties about the entry of Greece into the Community? The idea of having to translate all the documents into and out of Greek may be a minor problem, but there is the major problem that Greece is not an industrial society in the same sense as other members of the Community. What is the Government's attitude towards the entry of Greece into the Community?

Mr. Ennals: My right hon. Friend said that he was not an astrologer; he did not say that he was not a linguist. There are problems to be faced. My hon. Friend will know that the Council unanimously pronounced in favour of the Greek application for full membership of the Community. It was right that it should do so. It was agreed that preliminary work should be undertaken rapidly to allow negotiations to be opened as soon as possible. The transition period will have to be considered.

Mr. Renton: In view of the Tindemans Report, will the Minister explain to his EEC colleagues how he expects Britain to move towards economic and monetary union at the same pace as France and Germany? Is it not a bitter comment on the economic mismanagement by this Government that Mr. Tindemans should


appear to have relegated Britain to second division status?

Mr. Ennals: The Conservative Government took us out of the snake. I do not think that we need go further on the matter.
Consideration of the Tindemans Report is going on in each of the countries concerned. It will probably be a major issue when the European Council meets on 1st and 2nd April. My right hon. Friend has made it clear that we do not favour the two-tier approach.

Mr. Guy Barnett: When my right hon. Friend next meets his European colleagues, will he inquire how direct elections are to be paid for by the political organisations and by the Government? The Green Paper appears to make no mention whatever of this aspect of the affair.

Mr. Ennals: This is an issue which the political parties will need to study. My right hon. Friend has already conferred with the political parties on some of the problems which will be involved, and they will be looking at the different aspects of financing election campaigns in other Community countries.

Mr. Blaker: The Minister of State will be aware that an approach has recently been made to the European Community by COMECON for a comprehensive trade agreement. Will the Foreign Secretary take this opportunity of considering with his Community colleagues, and subsequently with our American and other allies, what changes we require from the Russians in their political and military practices and activities, particularly overseas, in return for the high technology and grain which Russia requires from the West?

Mr. Ennals: My right hon. Friend will be considering that question. I do not think that the hon. Gentleman will expect me to make a statement without a Question on the Order Paper.

Tindemans Report

Mr. Spearing: asked the Secretary of State for Foreign and Commonwealth Affairs when he expects the official printed version of the Tindemans Report to be available; and by what means and

at what price it will be on sale to the general public.

Mr. Ennals: Copies are expected to be available free of charge from the Belgian Embassy later this week and from the Community offices towards the end of the month. Copies will also be available from Her Majesty's Stationery Office towards the end of the month at a charge of 60p.

Mr. Spearing: Does my right hon. Friend agree that, as this report dealt with further steps towards European union and as the Government did not put the objective of European union in their letter-box leaflet during the referendum, it is important that the British public should have the report universally available? Why is a report to the Council of Ministers of the EEC being issued by the Belgian Embassy?

Mr. Ennals: It was presented by Mr. Tindemans himself. Therefore, it was reasonable that his own country should publish the report. Copies were rapidly made available in this country to Parliament and the Press——

Mr. Spearing: No. Three days later.

Mr. Ennals: —and copies will shortly be made available to the public as a whole.

Mr. Stokes: Will the right hon. Gentleman make clear to Mr. Tindemans and apparently to some of my colleagues that—speaking for England—most English people want a Europe of nation States, not a federal system?

Mr. Ennals: I assure the hon. Gentleman that the Government will not only speak for England but will take into consideration the interests of Scotland, Wales and Northern Ireland. The Conservative Party is not able to do that, but we are. Dr. Tindemans revealed that he was a federalist. However, his report contained no proposals for a constitutional change of that kind. I am not expecting to see a federal system in this country in my political life.

Mrs. Dunwoody: Does my right hon. Friend accept that the people of Britain have a right to know that in this report there is a suggestion of a two-tier economic system with a commitment to defence and the manufacture of arms, which are


matters of tremendous importance to them? Further, it is not true that the report was easily available either to Members of Parliament or to the general public.

Mr. Ennals: It was rapidly made available. I believe that it was available within a couple of days. If hon. Members did not get it, that is unfortunate. The issues contained in the report should be widely debated. They will be debated in this House. The public should know what the issues are.

Mr. Hurd: Do the Minister's last words constitute a pledge that we shall have a proper debate in this House on the Tindemans Report before the Prime Minister goes to Luxembourg to discuss it?

Mr. Ennals: A debate is a matter for my right hon. Friend the Leader of the House. I cannot give a pledge that there will be an early debate, but I have no doubt that there will be a debate in this House at the right time.

Mr. Ogden: Will my right hon. Friend help the House by saying that, if a Member, on his own or his constituents' behalf, asks the Foreign Office to supply him with a copy of the Tindemans Report, my right hon. Friend will at least consider such a request?

Mr. Ennals: Yes, of course.

Mr. Marten: The right hon. Gentleman referred to federalism. Has he read the covering letter of the Tindemans Report in which Mr. Tindemans says that in his opinion the Common Market will fulfil its destiny only if it espouses federalism? As for party consultations, does the right hon. Gentleman realise that there is not unanimity within the Conservative Party and that a growing number of people are opposed to direct elections? Therefore, will he meet those of us in the Conservative Party who are opposed to direct elections?

Mr. Ennals: My right hon. Friend has heard what the hon. Gentleman has said about direct elections.
The Tindemans Report was a personal report by Mr. Tindemans. In it he indicates his personal preferences. I have indicated that those preferences are not

shared by my right hon. Friend or myself.

Mr. Molloy: Should not my right hon. Friend take serious cognisance of what has been said this afternoon about direct elections and the Tindemans Report? Should he not make it clear to his colleagues in the EEC that there is great perturbation in the House about all these proposals? Will he not also agree that those proposals should be the subject of a full-scale debate?

Mr. Ennals: I can only say that my right hon. Friend has witnessed the scenes in the House this afternoon.

Mr. Scott-Hopkins: Will the Minister accept that my hon. Friend the Member for Banbury (Mr. Marten) speaks only for himself? Will he not also accept that one of the important issues in the Tindemans Report is that of further and closer political co-operation? Will he agree that the suggestion to set up a secretariat to improve political co-operation among the nine member States is essential and will lead to further and deeper talks on matters of defence?

Mr. Ennals: At this stage I shall not comment on the individual proposals contained in that valuable report.

WATER CHARGES BILL (PROCEEDINGS)

Mr. Newton: On a point of order, Mr. Speaker. My point of order concerns proceedings on today's Water Charges Bill. First, I seek your guidance on whether it is an abuse of the procedure of the House for the Bill to be pushed through in the way proposed. You will know that it had a short Second Reading last week—so short that many hon. Members were unable to make the points they wished to make and so short that Ministers were not even able to reply to the points that were made.
I understand that today it is proposed to put the Bill through both its Committee stage and its Report stage on the trot. Yet the Bill involves as much money as many Finance Bills and will have substantial financial effects for many of our constituents.
Secondly, if it is not possible for the House to be protected against this kind of steamrollering, I seek your guidance, Mr. Speaker, on two specific points which would then arise. First, will manuscript amendments be accepted between Committee and Report and will there be reasonable time in which to table them? The other matter concerns the position in another place and the extent to which—in view of the Bill's financial importance—the House of Lords can amend the Bill. I understand that there may be some uncertainty about that. However, if we, in this place, are not able to do our job properly, it is important to establish clearly that there will be a proper opportunity in another place to do so.

Mr. Speaker: I am grateful to the hon. Gentleman for giving me notice of the point of order that he wished to raise. It is in order for manuscript amendments to be submitted on Report when that stage follows immediately upon the Committee of the whole House. It has often happened that way. Any such amendments are subject to selection by me and I should, therefore, appreciate their being handed in to the Table Office or the Public Bill Office as far in advance as possible.
I turn to what may happen in another place. The hon. Gentleman will understand that I have no knowledge of the rules by which that House conducts its business. This House will have the usual opportunity to make up its mind about any amendments which may be made elsewhere. Should any matter of privilege be involved, the Chair will not fail to perform its duty in drawing the attention of the House to that fact.

Mr. Ridsdale: Further to that point of order, Mr. Speaker. Although I appreciate your courtesy and ruling about manuscript amendments, the difficulty is that we shall not have time to consult some interested parties.

Mr. Speaker: Unfortunately that is a common experience, as the hon. Gentleman knows.

QUESTIONS TO MINISTERS

Mr. Robert Hughes: On a point of order, Mr. Speaker. I congratulate my right hon. Friend the Foreign Secretary

on the Government's recognition of the MPLA Government of Angola. May I draw your attention, Mr. Speaker, to the fact that that recognition was made in reply to Question No. 5, which concerns relations between the British Government and the People's Republic of China? Although I respect your desire, Mr. Speaker, that Back Bench questions should be relevant to Questions on the Order Paper, does this not put Back Benchers in an extremely difficult position in trying to respect your ruling and frame relevant questions? Is it not possible even now to allow extended questioning on Question No. 5 in order that one of the most important issues of the day, namely, the future of Angola, should be put to the Foreign Secretary?

Mr. Speaker: The hon. Gentleman has raised two issues. First, Question No. 5 referred directly to Angola but the content of the Minister's reply is not my responsibility. It is the Minister's responsibility. Secondly, important as Question Time is, it is not a time to debate important issues. If I believe that the House is deeply concerned about a given subject, I try to let questioning go on a little longer.
It is my view that when an hon. Member is fortunate enough to be called to ask a supplementary question on someone else's Question, he is very lucky during Question Time if he catches my eye a second time.

Mr. Robert Hughes: Further to that point of order, Mr. Speaker. Although I entirely accept your ruling that the contents of ministerial answers is not a matter for you, I respectfully suggest that the protection of all Back Benchers is, to some extent, your responsibility. Therefore, may I convey through you, if possible, to the Leader of the House and to other members of the Government the view that if the Government wish to make statements they should take the opportunity to make them afresh?

Mr. Speaker: I am sure that the hon. Gentleman's point has been noted.

Mr. Peyton: Further to that point of order, Mr. Speaker. Although I fully appreciate that you have the greatest difficulty in exerting your very proper influence upon Ministers, nevertheless I hope that you will persist in trying to


encourage them to use a framework of conduct which is convenient to the House of Commons. If they slip in important announcements such as the one referred to, it is a great disadvantage to Back Benchers who welcome the opportunity to comment upon and explore announcements which expose new departures in Government policy.

Mr. Speaker: Order. I am much obliged to the right hon. Gentleman. I hope that I have the support of the House in trying to hurry up Question Time. The words of the hon. Member for Aberdeen, North (Mr. Hughes) are directed to the Government rather than to me. However, I shall do my best to ensure that both questions and answers are reasonably brief and to the point. I cannot control the content of answers but I have some influence on supplementary questions.

Mr. William Hamilton: On a point of order, Mr. Speaker. I think the whole House will agree with what you said about speeding up Question Time. However, I hope that it will not speed up too much. A predecessor of yours took great pride in the fact that he sometimes got through 70 Questions at Question Time, which was fast. The reason for the Question hour is to allow hon. Members to get at the Executive, and if we proceed too quickly we shall fail in that completely.

Mr. Speaker: Yes, I quite understand that. I do not know to which of my predecessors the hon. Gentleman referred. I know that it was not my immediate predecessor. I do not measure progress in arithmetical terms, but we have not gone beyond Question 25 in the two weeks that I have been in the Chair and I do not regard that as unreasonable for the House, because although on some Questions hon. Members want to press Ministers much more, other hon. Members are equally eager to reach the Questions that they have tabled. However, I shall do my best.

ANGOLA

Mr. Farr: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important

matter that should have urgent consideration, namely,
the situation in Angola and particularly the announcement by the Foreign and Commonwealth Secretary today that the Government have decided to recognise the MPLA".
The first information that any of us had of this matter was at 13.23 hours today when it appeared on the tape. In my belief, the matter is both specific and important. The situation in Angola has now deteriorated to such an extent that the whole of Southern Africa is at risk—not just South Africa and Rhodesia but countries such as Zaire, Zambia and Malawi. They are at risk from invasion by Cubans backed up by Russians.
The matter could hardly need more urgent consideration. The House should urgently consider—it may already be too late—what the Government are doing about this matter and what they have done at the United Nations. The Government should be called upon to explain to the House why they recognised the MPLA. It hardly enjoys universal support in that country. What assurances have the Government received from the MPLA——

Mr. Speaker: Order. The hon. Gentleman must not argue the issue now. He should submit his case for this subject taking precedence.

Mr. Farr: I was about to conclude, Mr. Speaker. I thought it of relevance to point out that we should consider why the Government took this course and what assurances they received from the MPLA about the future of British interests in Southern Africa now and if and when that regime continues to hold sway.

Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
the recognition of the Government of Angola".
As the House knows, under Standing Order No. 9, I am directed to take into account the several factors set out in the Standing Order but to give no reason for my decision. I have listened carefully to the representations of the hon. Member, but I have to rule that his submission does not fall within the provisions of the Standing Order and that therefore I cannot submit his application to the House.

BILLS PRESENTED

ATOMIC ENERGY AUTHORITY (SPECIAL CONSTABLES)

Mr. Secretary Benn, supported by Mr. Secretary Jenkins, Mr. Secretary Ross, Mr. John Smith, and Mr. Alexander Eadie, presented a Bill to extend the powers relating to firearms of special constables appointed on the nomination of the United Kingdom Atomic Energy Authority; to extend the property in respect of which, and the places where, they may exercise those and their other powers; to make certain minor amendments about their powers; and for connected purposes: and the same was read the First time; and ordered to be read the Second time tomorrow and to be printed. [Bill 70.]

ROAD TRAFFIC (SEAT BELTS)

Dr. John Gilbert, supported by Mr. Secretary Jenkins, Mr. Secretary Ross, and Mr. Secretary John Morris, presented a Bill to confer power to make regulations requiring the wearing of seat belts in motor vehicles: and the same was read the First time; and ordered to be read the Second time tomorrow and to be printed. [Bill 69.]

SCOTTISH BANKNOTES

3.44 p.m.

Mr. Douglas Henderson: I beg to move,
That leave be given to bring in a Bill to make Scottish banknotes legal tender throughout the United Kingdom.
I wish first to assure the House that there is no truth in the rumour that I was making available samples of Scottish banknotes to those hon. Members who decided to come along to hear my application. I have two samples in my hand, however, which are available for inspection by all interested inquirers at the appropriate time.
The background to this motion is the fact that, under current banking legislation, Scottish banknotes are not even legal tender within Scotland, whereas English notes are. Three Scottish banks issue these banknotes and their total circulation is about 5 per cent. of the total Bank of England circulation. Within Scotland, one Scottish note probably circulates for every Bank of England note.
The banks concerned are old institutions. The Bank of Scotland, the oldest, was founded in 1695, the year after the Bank of England, by the same man, William Paterson, who had cannily tried it out in England first, discovered that it worked and then set up the Bank of Scotland, having taken account of the lessons that he had learned.
The first purpose of the Bill is a practical one, to put Scottish notes on the same level as English notes. So long as English notes circulate in Scotland, I see no reason why Scottish notes should not enjoy the same status as English notes.
I make no apology for saying that the second reason for the Bill is the pride and confidence that we Scots have in our banking institutions. They were allowed to issue notes because of their great strength and their ability in the past to meet their obligations. They are pioneers of services like branch banks, mobile banks and—something which will be of benefit to many hon. Members—overdrafts. Without the Scottish banks, some hon. Members might not be here.
We are looking to the future. We regard the establishment of our currency as legal tender as the first stage in its


international recognition and in its becoming the currency of an independent Scotland. At present, there are difficulties in using these notes at various places, even in Scotland itself. British Petroleum, for instance, allows only Bank of England notes to be used for the purchase of petrol at its self-service stations.
In England, there used to be a tradition in benighted days and places of allowing only 19s. 6d. for a Scottish pound. I am glad to say that the missionary efforts of my hon. Friends and myself seem to be going some way to correct that situation, altough of course the Patronage Secretary will never succumb to those efforts. The Scottish note is now more widely accepted than it used to be.
Abroad, there are also some difficulties. A letter in The Guardian this week from a Scottish reader pointed out that, at the Gare du Nord in Paris, the rate of exchange for the Scottish pound was shown as lower than that for the English—[HON. MEMBERS: "Hear, hear."] Those shouts will be noted in Scotland. Would any other hon. Members like to join in the chorus?
The reader wrote:
I was so intrigued that I walked into the exchange office, queued for quite a while, only to be told that 'London' was so reluctant to take back Scottish pounds…that they had to treat it as a different and of course inferior currency.
The final purpose of the Bill is, in the generous spirit of the Scottish National

Party, to allow our friends in England access to an important asset. The Scottish banknote today is one of the most outstanding investments that any Englishman can lay his hands on. Today, he can get it at par with the pound sterling. In a few years, when we are an independent country, as the English pound sinks slowly over the horizon and the robust and secure Scottish pound rises, there will be a considerable premium on the latter.
In 1826, this House discussed an attempt to abolish Scottish banknotes. Among others, Sir Walter Scott defended them. Today, we are proud of our notes and of the institutions which issue them and we wish to set them a stage further on the road to a better future.

Question put and agreed to.

Bill ordered to be brought in by Mr. Douglas Henderson, Mr. Donald Stewart, Mr. Gordon Wilson, Mrs. Margaret Bain, Mr. Douglas Crawford, Mrs. Winifred Ewing, Mr. Iain MacCormick, Mr. George Reid, Mr. George Thompson, Mr. Hamish Watt and Mr. Andrew Welsh.

SCOTTISH BANKNOTES

Mr. Douglas Henderson accordingly presented a Bill to make Scottish banknotes legal tender throughout the United Kingdom: and the same was read the First time; and ordered to be read a Second time upon Friday, 12th March and to be printed. [Bill 71.]

Orders of the Day — WATER CHARGES BILL

Considered in Committee.

[Mr. OSCAR MURTON in the Chair]

Clause 1

DUTY OF WATER AUTHORITIES TO REFUND CERTAIN CHARGES

3.51 p.m.

Mr. Arthur Jones: I beg to move Amendment No. 1, in page 1, line 6, after 'refund', insert
'by such instalments as shall be prescribed by the Secretary of State by Statutory Instrument'.
The wording in the Bill has led to some confusion. The clause provides that on 1st April 1976 it shall become the duty of every water authority to refund. That wording is open to some doubt. One interpretation might be that on 1st April 1976 refunds shall be made forthwith and that there shall be a duty on those to whom refunds will be made to demand that they should be paid immediately. In view of the complications, I do not think that that can be the purpose of the Bill. This matter was taken up briefly by my hon. Friend the Member for Ashford (Mr. Speed) on Second Reading, when he said:
Clause 1(1)…appears to be inaccurate since the action taken will be by way of credit set off against general rate."—[Official Report, 12th February 1976; Vol. 905, c. 667.]
That raises another matter—namely, that there will not be actual refunds but credits against other demands issued by local authorities. In the light of what I have said, water authorities will be deluged—that was my hon. Friend's word—with demands for cash payments. The purpose of the amendment is to try to establish the position more clearly and to try to avoid such a deluge.
The task of effecting refunds, which will apply to industrial and commercial premises as well as to domestic properties, will be onerous. I do not think that that can be denied. There is a tremendous amount of administrative detail involved. There will be investigations and verifications in many cases. Details of the non-domestic properties

concerned are not available at present as only domestic properties benefited from relief this year.
A tremendous job of identification is involved. There are also substantial numbers of domestic properties in receipt of the 50 per cent. relief for the current financial year, despite the fact that they were drained to a surface water sewer. They will not be treated as unconnected for the purpose of refunds. Water authorities can do no other than take all reasonable steps to ensure that refunds are effected as soon as practicable on or after 1st April 1976.
The term "refund" may be misleading as in practice action that is taken in compliance with the obligation will be by way of set-offs against general rate. The Bill should specifically authorise this procedure, otherwise the water authorities may be faced with demands for direct refunds to consumers, notwithstanding that the district councils will make the appropriate calculations and allowances in their rate demands where possible.

The Minister of State, Department of the Environment (Mr. Denis Howell): I understand what the hon. Member for Daventry (Mr. Jones) has said, but I do not believe that the amendment is practicable. The purpose of the amendment appears to be to allow the Secretary of State to prescribe in the Collection of Charges Order that the making of refunds be spread. This is a different approach to that of other Opposition amendments, which are designed to allow the financing of refunds to be spread.
We take the view that the amendment would prolong the agony of getting over Daymond. The simple fact is that certain ratepayers, certain users of water facilities, or certain householders who have no facilities, have been required to make illegal payments over the past two years. It must follow that they are now entitled to get back their money. If we sought to pay them back the money in instalments, as the amendment suggests, I think that they would feel themselves to be particularly aggrieved.
On Second Reading the view was taken that the last thing we wanted to do was to fail to accept the House of Lords judgment. That judgment is quite clear. If people have paid for two years charges


illegally made by the water authorities, it seems that whatever the inconvenience to the water authorities or anyone else, we have an obligation to put the matter right as soon as possible. I do not believe that the instalment system would be accepted. In any case, I do not think it would be practicable.
I believe that people would not accept refunds in instalments but would award themselves what they thought was the credit they should have. If Parliament sought to put into statute form an instalment system which was not acceptable to those who had won their point in law, very serious questions would be raised, and not least for those local authorities which have to collect the money. It would place another tremendous administrative burden on local authorities in trying to challenge some of the householders involved, householders who might think it right, in view of the House of Lords judgment, to take the law into their own hands once more.
We have discussed in considerable detail with the local authorities the scheme by which refunds will be made. When a local authority knows that a property is unconnected it will reduce its rate demand by the amount of the refund. I should be reluctant at this stage, bearing in mind the extreme pressure on the timetable before us—local authorities are now assessing their rate demands, feeding the information to computers and trying to obtain the returns so that the rate demands can go out to the ratepayers on 1st April—to add any further contributory pressures. The principle lying behind the amendment would provide such pressures.
For all those reasons I hope that the hon. Gentleman will realise that the principle in the amendment would not be accepted in equity by the householders concerned, or by the local authorities, as being a practical proposition. None the less, I have some sympathy with what he has said. I hope that the amendment will not be pressed to a Division.

Mr. Graham Page: I am sorry that the Minister has begun with the argument that we are too late to make amendments of this sort, the administrative alterations which have been necessary to effect the plans that he has made with the

local authorities and the preparations that they have made to carry out his Bill all making it too late to make further alterations.
I appreciate that the House of Lords found that the people concerned are entitled to refunds but, after all, the repayment will be something of a windfall. I do not think the local authorities, on behalf of all other ratepayers, are morally obliged to make these refunds immediately in one year. It is a large sum of money both to those who have been deprived of it and to those who will have to pay it back. In all the circumstances of the case, everybody thought that the law was as it had been intended to be in the 1973 Act. Certainly in all the debates on the Bill everybody concerned considered that the law was being administered properly, but the House of Lords decided that that was not the case and that certain moneys should be returned. Surely in view of the heavy burden on the general ratepayers, it would be reasonable to spread the repayments over a period of time.
4.0 p.m.
I suppose that 70 per cent. of those who are to receive a refund comprise industrial or commercial ratepayers. They will already have cushioned themselves against this situation and will have been able to pass the charge on to customers. They are now to be paid all that money back in one adjustment in one year. So far as they are concerned, there will be no harm whatever in spreading the payment over a period of time.
The amendment leaves the matter to the Secretary of State to decide what is a reasonable period of time. In the rush to get this Bill on the statute book, it is unfair to ask the Opposition to be specific in their amendment, but this is a matter for the Government to consider. I wish to emphasise that industrial and commercial ratepayers will have made provision for these matters in their accounts, but in the case of domestic ratepayers, in respect of whom it is claimed that there has been an improper payment, it is surely reasonable to ask for an immediate refund. Therefore, it would be possible for the Secretary of State to say that for industry and commerce the refunds will be spread over four or five years, but that in respect of domestic ratepayers


who had been deprived of money to which they are entitled the refunds will be made within a year. I hope that the Minister will reconsider the matter and not cast aside the amendment out of hand.

Mr. Jim Marshall: I appreciate the point of view put forward by the Minister and I understand his feeling that repayment should be made as quickly as possible. However, we must not under-estimate the degree of difficulty faced by local authorities in working out the amount of money that should be refunded and the additional difficulty of identifying properties in respect of which refunds are to be made.
I urge the Minister, even at this late stage, to think again. Unless some alteration is made in Clause 1(7)(a), local authorities will face severe problems of identification. The Minister should make clear that it will not be possible for refunds to be made immediately. Perhaps words could be added to Clause 1(1) to the effect that the refund should be from 1st April 1976, or on or after that date. That will give local authorities more time to determine the amount of refunds and the properties affected by the House of Lords' judgment.

Mr. Gwynfor Evans: I wish to make a plea that domestic rate-payers should be refunded these sums as soon as possible, or certainly as soon as it is practicably possible for local authorities to do so. I am not saying that local authorities should be pressed too hard, but it is surely right that domestic ratepayers should be refunded as quickly as possible because they will not be refunded the full amount that they have paid. We must remember that we are now passing through a period of inflation. In other words, those ratepayers will be receiving that money, less the amount due to inflation. What the water authorities have had is an interest-free loan over that period of time from these rate-payers. Therefore, the sooner they are paid back the better.

Mr. Nigel Spearing: I wish to comment on the points made by the right hon. Member for Crosby (Mr. Page). Acts of Parliament and rules and regulations do not always give sufficient consideration to practical difficulties of administration. The amendment virtually lays down that local authorities

should be asked to make the adjustment twice. That surely will add to the already heavy difficulties in town halls. They already face possible changes in regard to direct billing in the second year.
Local authorities are also faced with having to make a split refund—one refund to the domestic ratepayer in one fell swoop and split refunds in respect of industrial and commercial properties. Since these matters have to be differentiated in rate demands, it will make matters even more difficult for town halls. Many calculations and adjustments have to be made and we do not wish to cause any more confusion in what has already become a sadly complicated issue.
Will the Minister say whether the right hon. Member for Crosby was right to say that a good deal of money has been taken from industrial and commercial properties that are unconnected. I understood that the House of Lords case was fought in regard to domestic properties and that relatively late in the day it was discovered that the judgment applied to a good number of industrial properties, and indeed to many large publicly-owned undertakings that will not now be subject to these charges. I may be wrong in thinking that the main refunds will be made to domestic rather than to industrial ratepayers, and I hope that the Minister will clear that point in his reply.
The question of unfairness in regard to the exemption of large industrial undertakings and the anomalies created is a matter of universal concern to hon. Members on both sides of the Committee, and indeed to the public as a whole.

Mr. James Scott-Hopkins: I hope that the Minister will carefully consider this amendment, particularly in view of the suggestion that there should be a split between the two forms of refund. The hon. Member for Newham, South (Mr. Spearing) said that there were bound to be administrative complications, but surely there is little cause to hold back refunds for domestic consumers.
The Minister said that if the refunds could be made quickly, this obviously would happen. If repayments are not made reasonably quickly, I know that some of my constituents will certainly


withhold automatically the amount they feel they have paid in error and much chaos will ensue.
Mention has been made of the situation of industrial users following the House of Lords judgment and the way in which their payments should be recouped. Therefore, I think that there is a case which the Minister should examine.
I do not wholly accept the argument based on administrative difficulties. It has been suggested that the local authority computer has already been used and that the software of refunding has been worked out. I assume that it is being said that the bills sent out have already gone through the computer.

Mr. Jim Marshall: Will the hon. Gentleman picture a house which is near a road and which has a drainpipe down which the surface water runs, from which it flows directly on to the highway and down a drain? One could argue that that was indirectly connected to a surface water or a foul water sewer, in which case it would qualify for sewage disposal payment, to empty the cesspool if it had one, plus the general service charge. That is the difficulty which local authorities will have to face and determine.

Mr. Scott-Hopkins: I agree that there are difficulties and problems and that the local authorities will have to determine this issue. However, following the judgment of the House of Lords, there is no option for the local authorities——

Mr. Jim Marshall: Mr. Jim Marshall rose——

Mr. Scott-Hopkins: I am sure the hon. Gentleman agrees that we do not want to prolong this debate. The local authorities will have to make a decision. Nevertheless, in principle, surely they have to adhere to the judgment which has been given. The Minister has accepted that that is so. Of course, there are complexities. I would be the first to admit that there will be anomalies.
I hope that the Minister will give serious consideration to the point of view which has been put forward by my right hon. and hon. Friends and agree that under the terms of the amendment it will be perfectly feasible for our proposals to be implemented.

Mr. Ken Weetch: In the light of all the complexities which have arisen from the House of Lords judgment and from what went before, surely this Committee should consider what in equity is right and what is the correct action to take now that the mistakes have been made and that certain moneys have to be paid back. As a layman I believe that if certain people have been wrongfully charged and have had to pay out money which the law said they should not have paid, they should get their money back as quickly as possible. In equity I cannot see any argument of substance against that proposition.
It has already been said that the provisions of the amendment prolong the administrative agony. In my view that is neither here nor there. At the end of the day we must make the administration fit the equity of the case and not the reverse.
The first principle is that if people who have been unconnected to the sewerage system have been charged, they should get their money back as quickly as possible. The right hon. Member for Crosby (Mr. Page) suggested, I think on the grounds of equity, that there was a distinction to be drawn between industrial and domestic users. All types of domestic users have had the rough end of the stick through these mistakes. The person who was unconnected had the rough end of the stick in the sense that he had to pay charges. As local authorities recoup the charges from other domestic ratepayers who were connected those people will face extra charges which they did not think they would have to face in the first instance. Therefore, to some extent everyone is at a disadvantage. However, the right hon. Member for Crosby made a perfectly fair point. The industrial consumers have already recouped these costs in their pricing mechanisms. Therefore, if my right hon. Friend can suggest any ways in which a distinction can be made, in the nature of the equity of these cases he should try to do so.
If the whole trouble stemmed from the faulty drafting of the Water Act 1973 and the inadequate arrangements that were made for transitional charges, should not central Government bear some responsibility in financial terms because they were the source of the error in the first place?

4.15 p.m.

Mr. Julian Ridsdale: I am sure the hon. Member for Ipswich (Mr. Weetch) realises that East Anglia faces a 20 per cent. increase in the water rate. It is in that context, bearing in mind that in the prices and incomes policy there is a restraint on wages, that I address myself to the problem.
This is a matter of great importance. The 20 per cent. charge, because of mistakes made by central Government, will fall on a great number of retired rate-payers who cannot afford it. It is for that reason that I ask the Minister to bear in mind that the large industrial users have taken this amount into account already. Indeed, the Government will be refunding huge sums to the large industrial users, but the people who will have to pay for the mistakes are the domestic ratepayers, especially those in East Anglia. The authority does not have reserves like some of the other water authorities because it is a new authority. I hope that the Minister will reconsider his decision to pay our millions of pounds to some of the big industrial users. This is a time of prices and incomes restraint which especially affects retired people, who, because of the mistakes, will have to bear a 20 per cent. increase in charges. The Government should think again.
Although equity may be required, as we must follow equity, so good law must follow common sense. In my view common sense says that we should help the domestic ratepayer far more than is proposed by the Bill.

Mr. Joseph Dean: The hon. Member for Harwich (Mr. Ridsdale) made a special plea on behalf of some of his constituents whose water rate will be increased by 20 per cent. this year.

Mr. Ridsdale: I was referring to the whole of East Anglia.

Mr. Dean: I note what the hon. Gentleman has said. However, I have to shed crocodile tears for the hon. Gentleman's constituents. The fundamental mistake was made in the last local government reorganisation in connection with which the right hon. Member for Crosby (Mr. Page) cannot stand aside or be blameless. He played a major part in managing to concoct the mess in which we now find ourselves.
At that time the Government of the day did not know the consequences of the legislation they were passing, as was shown by the judgment in the House of Lords. They assumed that they could carry on with custom and practice which have taken place in the past. Once again the onus of putting matters right in an administrative sense falls upon the local authorities, some of whom were stripped of their powers, who were doing a first-class job before local government reorganisation. Now they have to unscramble the mess.
I remind the House that at the time of the local government reorganisation there was an Adjournment debate dealing with the whole question of the new water authorities. At that time it was suggested that legalised brigandry was taking place because most of the existing large water authorities which were centred on the big cities and which had put millions of pounds into providing water and sewerage services were, at the stroke of a pen, handed over to someone else. The city of Leeds possessed £37 million in valuation and a certain amount in standing debts, but this was taken away and given to the new water authority. The same happened in Manchester where £200 million worth of assets had been built up by the city but was taken away overnight. This is perfect example of a Government introducing a scheme, the end result of which it does not know. This Government now have to pick up the hot potato and to put the matter right.
I hope that people can be recompensed as quickly as possible if they have been falsely charged. What sort of situation would it be, however, if it were discovered that the whole basis of charging for sewage collection under previous Acts was illegal, too? I hope that the Minister will try to create a situation in which the money can be refunded as quickly as possible, but it is no good expecting local authorities to put the matter right over-night. Their calculations for the current year have already been made based on what they will receive in rate support grant.
I hope that the Minister will consider the whole question of regional water authorities. They seem not to be answerable to anyone in particular. Their administrations are highly salaried. They demonstrated their concern for the


national economic situation just before the Government and the trade union movement reached agreement on the £6 pay limit. They decided, in their selfish interest, to beat the limit by awarding their chief engineers a £4,000-a-year increase in salary. These are some of the aspects which should be looked at and which go beyond paying money back to householders wh owere incorrectly charged.
It does no good to the status of this House for hon. and right hon. Members to speak in the debate as though their hands are completely clean and they bear no responsibility for what has happened. Let us make clear what has happened in this situation. These water authorities do not even collect the money. The local authorities have to collect it on their behalf and then hand it over to them. Some of the employees of the water authorities get much higher salaries than the chiefs of the local authorities.

Mr. John Farr: I should declare that I have an interest in this matter in that I own one of the properties on which charges were wrongly levied in 1974–75 and 1975–76—wrongly, because it is not connected to the public sewerage system. I am looking for a refund, and pretty rapidly, too. It is wrong for payment of the refunds to be too protracted. The money could be repaid by instalments by all means, if that is the answer, but a pattern of instalments should be established so that all the money should be paid back within six months.
Basically, the burden of what has happened is falling upon rural dwellers. Living in the countryside, whether on a farm or in a village, already has enough disadvantages. Public transport is non-existent, petrol prices have multiplied, and in my constituency a post office has recently closed down.
The payments should be made at an early date, and in full, and there is a strong case for requiring the payment of interest on the outstanding refunds at current rates. I could quote many cases from my constituency where payments were wrongly made up to two years ago. Since then interest rates have probably averaged 12 per cent, to 12½ per cent. Some farmers made substantial payments. It would be wrong for the House to pass

the Bill without providing for the payment of interest for the time during which the money is outstanding under any timetable which may be agreed.
I have been lobbied by the Severn-Trent Water Authority which operates in my constituency. It has asked me to make certain points, but I do not recommend them to the House. It feels that the Bill should be amended so that the regional water authorities should make the refund as soon as practicable. Many water authorities would like to stress that the word "refund" is inaccurate, They would like compliance with the obligation to be by way of an allowance against the general rate and they would like the Bill specifically to authorise that procedure. I undertook to mention the points, although I cannot say that I agree with them.
All I want for my hundreds of constituents who are entitled to money paid out years ago is that it should be paid back as soon as possible and that a proper rate of interest should be levied.

Mr. Hal Miller: I support the amendment to provide for refund by instalments. I, too, declare an interest in that I was in a hereditament which was not provided with sewerage by the authority, and I, too, am looking forward to a refund. I part company with my hon. Friend the Member for Harborough (Mr. Farr), however, on his suggestion that this should be done immediately and with interest. As regard those not connected to sewers, my fear is that the last state of these men will be worse than the first. The matter is proving of great concern already to my district councillors who have the duty of levying the charges on behalf of the water authority.
The increase in the charge this year is more than 50 per cent. and has been referred to the Price Commission by my district councillors. The charges now exceed the district council rate, and that is a lunatic state of affairs which will be compounded if the money is to be refunded in one go in one year. It is for that reason that I strongly support the objectives of the amendment. We must bear in mind the considerable administrative burden which an immediate refund would impose upon the authorities.
The only point on which I agree with the Severn Trent Water Authority is in


its suggestion of a remission of future charge rather than a refund. The Bill has been pushed through with such haste that it has been impossible to obtain reasonable instructions and fully to ascertain its consequences. I am most concerned that the last state of these men will be worse than the first. I hope that the Government will accept the amendment which will allow some breathing space for further consideration of those consequences.

4.30 p.m.

Mr. Keith Speed: The difficulty facing the House is that, for reasons which we understand, we have had only a little time—between Second Reading and today—in which to consider the matters dealt with in the Bill and this means that many of the amendments in my name and in the names of my hon. Friends may be defective.
I agree with the hon. Member for Carmarthen (Mr. Evans). What we are trying to achieve is to get the refund paid not only as quickly as possible, but as quickly as practicable. There is a real danger for both water authorities and district councils that under the Bill as drafted many people will expect to get their refund on 1st April or perhaps within a few days thereafter. There is, as the hon. Member for Leicester, South (Mr. Marshall) said, the question of ascertaining all the properties involved, and unless we later make some amendment to Clause 1(7), we shall make life very difficult for many district councils.
The debate has ranged over the whole question of the different proportions of refunds and whether industrial or domestic ratepayers will benefit. I do not wish to anticipate later amendments, but my information—and perhaps the Minister can confirm this as the matter has been raised by others—is that at the moment 60 per cent. of the refund will go to statutory undertakings or nationalised industries, 20 per cent. to domestic rate-payers, and the other 20 per cent. to non-domestic ratepayers. If that is so, it is a matter which the House may wish to consider seriously when we come to later amendments.
What we are seeking to do is to say, in ways which may be defective—and if they are perhaps the Minister can suggest ways in which we can word this to get the matter clear—that the refunds shall be

paid as soon as possible as well as as soon as practicable. We do not wish to make life intolerable for water authorities or district councils which may be facing law suits by ratepayers who do not get refunds immediately because of the practical difficulties. That is what we are about, and if the Minister could respond to that it would be of great assistance. With respect, it is no good the Minister or I saying that the money will be repaid as soon as possible after 1st April. We want to make sure that the matter is legally watertight so that we do not have people going to their solicitors to get them to chase the refunds.
My reply to the hon. Member for Leeds, West (Mr. Dean) is that we shall make progress in this Committee and on the Bill if the House as a whole accepts that no one is guiltless. I accept the reasonable proposition put forward by the right hon. Gentleman on Second Reading. As he said, the previous Conservative Government did not get it right, but the previous Labour and Liberal Oppositions did not get it right either, and many people, including local authorities and others, did not seize on this point. We have made a mistake. We are all genuinely trying to put the matter right and we should not pursue too far a Second Reading debate on the Bill, otherwise we shall sit very late into the night indeed.

Mr. Denis Howell: I respond at once to the closing words of the hon. Member for Ashford (Mr. Speed) and say that that is very much the spirit in which we have approached the Bill. The previous Conservative Administration had all the resources and the advice that I have, and between us we did not pick this up. I do not complain about that, but I think that it is the duty of the House, with a degree of humility, to seek to put the matter right rather than allow the difficulties to continue.
It has been said that we are rushing the Bill through, but we cannot rush something through too quickly if that is being done to put right something that has been proved to be illegal, and I do not think that it helps to try to apportion blame in this matter.

Mr. Graham Page: My personal opinion is that we were all right, except the Law Lords.

Mr. Howell: That is a point with which I have considerable sympathy. After all, it was only by a majority of three to two that the Law Lords decided that we were wrong, and the No. 3 judge said that he had such grave doubts about the rightness of his decision that he put it forward with great hesitation. Nevertheless, on such considerations is the law of this land made, and we are faced with the effect of that judgment. I shall not go any further into the nature of their Lordships' judgment. Suffice it to say that I, as a referee, accept the whistle when it is blown, and we must now try to put things right.
The House would do well to remember that these charges were illegal. My hon. Friend the Member for Leeds, West (Mr. Dean) and the hon. Members for Carmarthen (Mr. Evans) and Harborough (Mr. Farr) are right. In our consideration of these matters we cannot proceed from any proposition other than that the charges have been declared to be illegal. We have to accept that as the starting point for this Bill.
Whatever the Bill says, if anybody in this country,—domestic or industrial—knowing that the charges which he had paid had been declared to be illegal, decided to help himself to a refund, that would create an impossible position. It is doubtful whether the courts would uphold regional water authorities if they were trying to stop people from recovering money which it had been held had been collected illegally in the first place.
What is being asked for in this amendment is retrospective legislation. What we want to do is to get the matter right for the future. What some hon. Members are saying is that we cannot get it right for the future, so let us hedge our bets about the past, let us put an illegality right by instalments. I do not believe that that would go down well with domestic ratepayers, with farmers or even with nationalised industries.
Let me give the House a breakdown of this figure of £60 million, which is what it will cost us. One-third is to be refunded to domestic users and two-thirds to nationalised industries. That makes it attractive for some Tory Members to say, "These are monolithic nationalised industries and we can treat them"——

Mr. Tony Newton: The figures do not make sense.

Mr. Howell: One-third and two-thirds make a whole.

Mr. Newton: What about the other industrial and commercial ratepayers? The figures are to be one-third for domestic users, and two-thirds to the nationalised industries. What about the rest of the industrial and commercial sector?

Mr. Howell: I am sorry. It is not the figures that are wrong, but my terminology. I should have said two-thirds to nationalised and other companies, that is, the whole of the industrial content. It is true that nationalised industries are large units and that there are big concerns such as ICI and IMI in Birmingham, but if we consider the nationalised industries we see that they have recovered this money from millions of their users. What we are talking about are millions of people who have incorrectly been charged for gas and electricity. Had the true situation of the law been realised, their bills would have been smaller.
I cannot say, and I do not think the House ought to say, that it would be an affront to all those consumers to argue that we recognise the plight of the domestic user but we shall totally disregard the plight of millions of other users because they happen to have paid their bills to nationalised industries.
I agree with my hon. Friend the Member for Ipswich (Mr. Weetch) that we have to deal with this matter on the basis of equity. In my judgment we must deal with the matter on the basis of equity. But there will be difficulties.
My hon. Friend the Member for Leicester, South (Mr. Marshall) raised the question of the difficulties of identification. Such difficulties will be nothing like as great now as they would have been a year ago when we gave a 50 per cent. discount, which made it possible to identify all the domestic properties that were not connected. There will be difficulty in identifying those people who have paid the sums of money but who have moved house.
The Bill allows regional water authorities to consider recovering the money in instalments. Local authorities, on the whole, have said that they do not want


that because it would create serious cash flow problems for them. They would have to borrow money for that purpose and pay interest charges.
I have sympathy with what has been said about paying interest. That is an argument for getting the matter over and done with as soon as we can. As water authorities have collected the money illegally in the first place, it could be argued that since they have had free use of the money, they should pay some interest. But we are not proposing that at the moment. The hon. Members for Carmarthen and for Harborough must be right in saying that the least the House can do is to pay the money back as soon as possible and to get the matter out of the way.

Mr. Farr: I was prompted to raise the matter because this year the Inland Revenue has started to levy interest on overdue tax. It is illogical for those who have paid money that they should not have paid in the past not to have interest relief on that money.

Mr. Howell: I understand that the charging of interest on overdue tax is not new, but I have not found myself having to pay such interest, so I cannot speak from personal experience.

Mr. Graham Page: If an action were brought, based on the judgment of the House of Lords, for the return of this money, judgment might be obtained and I think that the plaintiff could ask for interest on the money he had paid over, as from the date it was taken from him. Perhaps we should include in the Bill a provision to preclude an action of that kind.

Mr. Howell: The confusion gets worse as the matter proceeds but I am obliged to the right hon. Gentleman for mentioning it and I will have the matter examined.
For the reasons I have given I cannot advise the House to accept the amendment. I know that the hon. Member for Daventry (Mr. Jones) has had views expressed to him by the Association of District Councils, but the views I have had from the treasurers of that Association seem to be at variance. Some of the other local authority associations, when asked about their attitude recently, said "For heaven's sake, get this thing out of

the way." They said they had to decide their calculations, what their rate demands were to be, and that if there were any undue delay, they would be in administrative difficulty. For those reasons above all, I ask the House not to pursue the amendment.

4.45 p.m.

Mr. Arthur Jones: I recognise the Minister's difficulties and I know that he has taken wide advice on the problems which have been drawn to his attention. We have had a wide-ranging and interesting debate on the amendment, but to leave the situation as it is will lead to great difficulties and a tremendous number of problems. Some of them have been highlighted during our discussion.
Our purpose is to ensure that repayments are made as soon as possible and I subscribe to that aim. The obligation that was placed upon the water authorities to refund on 1st April 1976 is incapable of fulfilment. Therefore, we should be trying to find some method of easement by which a sensible arrangement can be made. The rigidity which the Minister has brought to the debate on the amendment leads me to the conclusion that he has not been made aware of the practical problems with which the water authorities will be faced. We seek to put the matter right. We need methods to do that which will not create further problems and anomalies. That is the purpose of the amendment.
The amendment refers to
such instalments as shall be prescribed by the Secretary of State by Statutory Instrument.
That is the key to the amendment and the Minister has not addressed himself to it. The amendment would enable water authorities to meet the timetable and to differentiate between the liability for the refund to domestic ratepayers and to industry. Repayment on the basis of
prescribed by the Secretary of State by Statutory Instrument
would bring some regulation to the arrangement. It does not introduce any liability for delay in payment or prevent repayment from being made as soon as possible. The purpose of the amendment is to bring some order into repayment. I submit that order will not exist as the Bill stands, and that is proved by


the views which have been expressed by the regional water authorities.
My earlier quotation was from the Severn-Trent Water Authority and I know that the Anglian Water Authority has the same reservation, because I talked to the chief executive of that authority this week. Having had the opportunity to bring the matter forcibly to the Minister's attention, I do not think that I can do more. The matter could be further examined in the House of Lords to see whether re-arrangements to Clause 1 are required. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Under-Secretary of State for Wales (Mr. Alec Jones): I beg to move Amendment No. 2, in page 1, line 7, leave out from 'disposal' to 'in' in line 10 and insert
'paid in pursuance of the Water Authorities (Collection of Charges) Order 1974 or the Water Authorities (Collection of Charges) Order 1975'.

The Chairman: With this we are to take Government Amendments Nos. 3. 4 and 49.

Mr. Jones: These four amendments are part of the Government's attempt to ensure, as I said on Second Reading, that on this occasion we get things right. It is also partly in response to points raised by the hon. Member for Ashford (Mr. Speed) when he drew our attention to the need to tighten up certain of the definitions.
Amendment No. 2 particularly is intended to define more precisely the sewerage charges which are to be refunded. The hon. Member for Ashford, and others, implied on Second Reading that the present wording in the Bill might imply, for instance, that trade effluent charges should be refunded. Since the only charges with which the Bill is concerned are the general services charges collected from all properties under the Collection of Charges Orders, it is appropriate to define them in that way.
The general services charge of course covers items other than sewerage, which are not be refunded—pollution, amenity, recreation and fisheries being obvious examples—so the clause as amended will still refer to

charges for sewerage or sewage disposal paid in pursuance of the…
Collection of Charges Orders. I think that that meets the point put by the hon Member for Ashford on Second Reading, reported in column 668 of Hansard of 12th February.
Amendment No. 3 is purely consequential on Amendment No. 2, because the latter has the effect of deleting the reference to the financial years in subsection (1).
Amendment No. 4 again is partly in response to the hon. Member for Ashford and is basically a drafting amendment to eliminate any risk of water authorities being required to refund water rates or charges in circumstances where a water supply is in fact made available.
The wording of the Bill might imply that charges had to be refunded in the case of premises which had the use of a communal water supply—for example, as in the case of Jon Migael, to which the hon. Member for Ashford referred on Second Reading. It has also been suggested that it would call for refund when the consumer had not actually used his supply on the relevant date, perhaps even because it was a public holiday. We believe that Amendment No. 4 will close any such loopholes and thus ensure that refunds of water charges go only to those who genuinely did not receive any services from the water authority.
Amendment No. 49 again is consequential on Amendment No. 2, and all these amendments taken together secure. I believe, the tighter and more precise definition that the Opposition called for on Second Reading.

Mr. Speed: I am grateful for these amendments and agree that they go a long way to meet points we raised on Second Reading.
This is the only provision in the Bill where the Collection of Charges Order 1975 is mentioned. On Second Reading, I asked about validation of the Order and mentioned the fears put to me by a number of authorities that, unless it was validated, all kinds of aggrieved parties who did or did not get the 50 per cent rebate could come forward perhaps with legal claims. As the object of this exercise is to stop that sort of thing in future, may I ask the Minister whether his advice on this position is the same as


mine, or whether he thinks that there is no danger of the situation I have posed?
I hope that I do not sound churlish about Amendment No. 4, but one has had second or even third thoughts since Second Reading. It largely meets the point I put then, but I wonder whether it meets a point which has been put to me since. If there were a burst main on the day in question, that might well be taken as meaning that on the relevant date no supply of water was made available by the water authority, and thereby one could find that a company or an individual was getting the benefit of this provision. I wonder whether a form of words such as "which were charged on the basis then of a supply of water made available to the hereditament" would meet the point if added to the wording of Amendment No. 4. Would that make it 100 per cent secure? If the Minister is advised that some such wording would make the provision safe from the burst main syndrome, as it were, perhaps the other place could look into it. I want to be doubly sure that there is no legal loophole which could embarrass us all later.

Mr. Max Madden: As has been said, this whole matter is shrouded in uncertainty. I hope that my hon. Friend will be able to remove some of the uncertainty about the position of garages, a point which has been brought to my attention. These are in particular garages belonging to properties which are themselves connected to the main sewerage and water, and garages the owners of which have been levied for water supplies although the garages themselves are not connected to the main water supply.
Am I right in thinking that in these circumstances refund would be made to the owners of garages which were not themselves connected to the main water supply although the main property was? We are clearly concerned with the question of hereditaments in the Bill, but it does not specifically deal with this point, which has been brought to my notice by a considerable number of constituents with garages not connected to mains supply, although they have previously been levied for water charges. What is their position?

Mr. Graham Page: I add my plea to what the hon. Member for Sowerby (Mr. Madden) has said. I have a number of blocks of flats in my constituency where the garages are quite separate and are under separate assessments. Right at the beginning of this issue, the problem was raised with me whether those garages, not connected to the water supply and not connected to the sewerage but, being separately rated, would come in for the benefit of relief as not being connected. It seems to me that if they are separately assessed and are therefore separate hereditaments, they would come in for relief under the Daymond case.
I should, I feel, ask about the relevant date. "Relevant" is a word frequently used in drafting in order to cover a multitude of sins, but a date has to be relevant to something and in this case it is left a little in the air.
5.0 p.m.
What is meant by the reference to these Orders in the Bill? I recollect that the general services charge was for all services other than the supply of water and I assume that, by naming these Orders in the Bill, we are referring to all services, rights and facilities provided by a water authority other than the supply of water, but perhaps the Minister could confirm that point.
We quote the Orders in the Bill under this amendment, but was it not the basis of the Law Lords' judgment that the Orders were invalid? Are we validating them now and enshrining them in the Bill as valid Orders? This is a questionable procedure because they might not be valid.

Mr. Gwynfor Evans: I do not know whether this is the place to raise the question of properties which are not connected to mains sewers and therefore will gain on the roundabouts of the refunds but could lose severely on the swings of the charges made for clearing their cesspits.
These are not necessarily big houses. In fact the majority are small properties. They could find themselves under a grave disadvantage because of the justice being done to those who have already paid charges which are to be refunded.
Perhaps the Minister would comment on this problem.

Mr. Alec Jones: The hon. Member for Ashford (Mr. Speed) raised the question of the 50 per cent. relief last year on Second Reading and it is matter we have considered in some detail. Our advice is that, provided that Clause 2 is passed and the Government amendments are accepted, the 50 per cent. relief becomes legal and so does the 50 per cent. charge to those who have paid it. That part of the Order was never challenged in the courts.
However, the hon. Member for Ashford dropped something of a bomb-shell on us when he talked about the problem of burst mains. This might be considered as far-fetched, but we shall have to look at it because we want to ensure that the Bill is 100 per cent. right. If the situation is not covered, we shall take steps to cover it in another place.
If properties have a supply of water made available, whether or not they are directly connected, the occupants are not entitled to a refund. The issue is the availability of a water supply, rather than the direct connection.
The right hon. Member for Crosby (Mr. Page) referred to garages with a separate assessment. I understand that owners of garages which are not connected to surface water or sewerage drains will get a refund.

Mr. David Crouch: Could the Minister explain what he means by connections for the supply of water? Apparently he did not necessarily mean a direct connection to the water supply. Does he mean water supplied by pipe or supplied to a tank by a tanker? It is staggering that in 1976 there are many houses in my constituency, not 10 miles from Canterbury, with no piped water. Are they considered by the Government to be in receipt of a direct supply of water? They get their water delivered in a tanker and put into a tank in the garden in true eighteenth century fashion.

Mr. Jones: I am advised that supply includes the points made by the hon. Member for Canterbury (Mr. Crouch), but we are not dealing with charges for water, only with refunds as a consequence of the Daymond case.
The right hon. Member for Crosby referred to the relevant date in the Bill and said it had to be relevant to something. That is why the date is spelled out in Clause 1(3) and Clause 1(4).
Only one aspect of the Orders was invalid and my advice is that there is no reason why they should not be included in the Bill with the wording we have used.

Mr. Graham Page: Surely it was on the very aspect of payments by those people whose properties were unconnected to a sewer that the Orders were found to be invalid? We are talking about that payment in the amendment.

Mr. Jones: I take the right hon. Member's point, but my legal advice—and I will check it again to make sure—is that there is no reason to fear that the inclusion of these words will present any difficulties. I will look into it again because both sides of the House are anxious to ensure that we do nothing wrong.

Mr. Madden: I am sorry to bring my hon. Friend back to garages, but from what he said about separately assessed garages it seems that if water is available to a garage, it is liable to a water charge. That is rather unclear. Would a rule of thumb definition for ordinary mortals be that if there is a tap providing a water supply, a charge is in order and that if there is no such tap the garage is not liable for a charge?

Mr. Jones: My hon. Friend is again talking about the charge for the water supply. We are not talking about charges for supply. The Bill deals with refunds of the general services charges. If he has a specific point and wishes to contact me, I will try to help, whether it is about water or about sewerage.

Mr. Newton: My understanding is that where a garage is the subject of a separate rating assessment and a separate rate demand it will get a refund, but if it is treated as part of the same hereditament as the house and there is one rate demand covering the rate for the house and the garage, if the house is liable to the sewerage charge so will be the garage.

Mr. Alec Jones: That is right. The hon. Gentleman has expressed it much


more clearly than I did, and I am grateful to him.

Amendment agreed to.

Amendments made: No. 3, in page 1, line 12, leave out
either of those financial years" and insert "the financial year 1974–75 or the financial year 1975–76".

No. 4, in line 13 leave out
to which they did not supply water on the relevant date" and insert "for which on the relevant date no supply of water was made available by them".—[Mr. Alec Jones.]

Mr. Newton: I beg to move Amendment No. 5, in line 14, at end insert—
'Provided that in the case of such charges paid by a public corporation or other body within the public sector, the duty of water authorities to make such refunds shall not take effect until 1st April 1977'.

The Chairman: With this we are taking the following amendments:

No. 11, in page 2, line 15, leave out 'year 1976–77' and insert 'years 1976–79'.

No. 12, in line 15, leave out 'year 1976–77' and insert 'years 1976–78'.

No. 13, in line 15, after '1976–77', insert 'or subsequent years'.

No. 17, in line 17, leave out 'that year' and insert 'those years'.

No. 18, in line 17, at end add 'or subsequent years'.

No. 19, in line 20, leave out 'they' and insert 'one third of them'.

No. 20, in line 20, leave out 'they' and insert 'one half of them'.

No. 21, in line 21, leave out
'during the financial year 1976–77'
and insert
'in each of the financial years 1976–77, 1977–78, and 1978–79'.

No. 22, in line 21, leave out
'during the financial year 1976–77'
and insert
'in each of the financial years 1976–77 and 1977–78'.

No. 23, in line 22, at end add 'or subsequent years'.

Mr. Newton: The amendments are a double-barrelled attempt to achieve some phasing of the resolution of the problem. On the one hand, Amendment No. 5 provides that refunds to the nationalised in

dustries and other public bodies should be deferred for one year and be payable not from 1st April next but from 1st April 1977, which will save the water authorities some money. On the other hand, I suggest that the process of recovery from those who are liable to sewerage charges should be spread over either two or three years.
I have to declare an interest, which I hope I shall not have to declare each time I speak in these debates. I am an unconnected sewerage ratepayer and therefore stand to gain financially from the passage of the Bill.
I wholly support the refunds. I have always thought it unfair that unconnected ratepayers should have to pay the whole charge, and I greeted the House of Lords judgment with enthusiasm, although that enthusiasm is slightly reduced by my realisation of the difficulties. Although in other circumstances I should be inclined to argue that the bill should be met by the taxpayers, in present circumstances there is probably no alternative to recovery from ratepayers.
I am disturbed by what the Minister said about the administrative difficulties of local authorities. If the Minister means that all the data, on the basis of the Bill, have been fed into local authority computers and the sums have been done and nothing can be changed, we might as well have gone home an hour ago. It is not just a question of the timing and the amount of the refunds. There is also the question of the basis on which charges are to be levied in the future. Indeed "in the future" in this context includes 1976–77. If all that has already been sewn up, we are wasting our time.

Mr. Denis Howell: That is not what I was saying. The hon. Gentleman suggests that the views of the House will be totally disregarded. That is not so. There has been considerable discussion with local authorities and regional water authorities on how to put right this appalling mess. We have reached a degree of understanding that, although it is extremely difficult, this is the most convenient way of doing it.
The treasurers have to present their rate estimate to their councils, and that process is going on at the moment. When the councils have endorsed the estimates,


information has to be fed into the computers and the bills have to be sent out to all the ratepayers. All I am saying is that if the assumptions on which that administrative exercise is done are disturbed, almost intolerable administrative problems will arise for the local authorities in getting out their rate demands for 1st April.

5.15 p.m.

Mr. Newton: Perhaps I may respond by saying that all I am saying is that the House is in an intolerable position. If the House believes that the proposals in the Bill for the refunds and, more important, the basis of charge from next April, are wrong, we are under the greatest possible pressure to leave those matters wrong for the administrative convenience of local authorities. Although I accept what the Minister says, that is a thoroughly unsatisfactory state of affairs and I do not propose to pay much attention to that argument.
We were concentrating earlier not on the fairness of what we are trying to do in relation to refunds but on whether what we are proposing is fair to those who will have to foot the bill. We are all agreed that it is right to make the refunds, especially to domestic ratepayers. What worries me is the effect that will have on connected ratepayers, who will be faced with a £60 million bill in one year. I am told that in the Chelmsford district it will raise the overall increase in the rate by 25 per cent. Instead of an increase of 9p in the pound in the total rate there will be an increase ofl2p in the pound as a result of the Bill. That 3p in the pound may not sound a large amount, but it will place a considerable burden on less well-off ratepayers, and the House has a duty to those people to consider carefully what it is doing.
It is peculiarly unfortunate that this problem should arise in the coming April. The rating system is deeply controversial and unpopular, and the additional burden will add to the political difficulties and controversies surrounding it. It also comes at a time when attention is being concentrated on the next phase of the incomes policy, and many people who are not well off will be faced with a significant increase in their rate bills. They will say that if the Government are

throwing these charges on them they want some compensation on the wages side. It will be difficult to resist that argument. In no way is it helpful to the Government or to general public policy to throw this burden on to ratepayers in one year.
However we may argue about the Water Act 1973, the Lords decision or the Bill, a series of errors and bungles has arisen, I suspect, from ignorance in the Department of the Environment about what life is like outside metropolitan areas. It is unfair that those who live outside metropolitan areas and everyone else should be expected to put the errors right and that two years of errors should be put right in one year.
In purely political terms, we know that two-thirds of the refund will go to the public sector and nationalised industries and about half of the extra charges will fall on industry. Many domestic rate payers will be confronted with larger bills so as to give a windfall handout to large public corporations, many of which will regard the refund as a happy accident. I do not think that that aspect of the matter will be very easy to defend to our constituents when they realise what is happening.
There are two arguments against my proposals for phasing the refunds in terms both of giving the nationalised industries their money a little later and of phasing the recovery charges against other ratepayers. The first is administrative. We have heard a little about that. I do not find it very easy to see why the authorities, which will know reasonably soon the total of what they will have to find, should not simply allocate that as between the next two or three years. They will not have to do much individual work. They will take into account, in assessing how much they have to raise, the average for the next two years instead of the present year. I do not see much administrative difficulty in that. Then they would simply levy charges on individuals according to the total that they will then know they have to raise.
As regards cost, my proposal would actually reduce the financial burden on the water authorities, because, on my figures, they would be making about 60 per cent to 70 per cent of the refunds a year hence, and would have the continued use of that money during the period—that is, they would be keeping


more of the money in hand and making only either one-half or one-third of the refunds in the coming year. It would not impose a greater burden of interest charges on the water authorities, though clearly it would mean that the nationalised industries, which would not be getting refunds, would be suffering some small disadvantage over that period. However, if it enabled us to spread the burdens on those connected ratepayers who will have to face this large bill all in one year, I think that most people would think that that was a fairer way of dealing with the mess that we have got into.
I hope that the Minister will give these proposals serious consideration.

Mr. Crouch: My hon. Friend the Member for Braintree (Mr. Newton) moved his amendment with great clarity. I have a lot of sympathy for what he said. He is obviously concerned about the very large amount involved in the total of refunds as a result of the hand-out which the public corporations—I think that my hon. Friend meant nationalised industries in that sense—are liable to enjoy.
My hon. Friend said something in his argument which reflects a situation which may apply in his constituency but which does not apply in other constituencies. One of the things by which I have been struck since we reformed the whole of our water supply and sewerage systems in Britain and set up the water authorities is the enormous differences and discrepancies which have been created in the last few years across the country. In an age in which we talk about harmonisation, we have produced the most calculated chaos that I have ever thought possible to see in my experience as a citizen, let alone as a parliamentarian. Even within my own area of the Southern Water Authority, the differences in relation to the approved charges are fantastic.
I speak with some spirit because my constituency of Canterbury bears the highest approved charges in the whole of the Southern Water Authority. It is hardly a laughing matter, but that is all water under the bridge. I do not seek to make a joke about it.
I want to talk about the differences which exist between areas and, as regards Members of Parliament, between constituencies. I agree that the Bill and

the amendments concern the adjustments which the Government and Parliament have to make to deal with the decision reached in the other place. We are talking about refunds and how they should be made, whether quickly or spread over a period. However, the difference about which I am concerned is that there is to be a hand-back to those domestic householders whose properties are not connected to main sewerage, when it has been ruled that they have paid unjustly and incorrectly over the past two years for a service that they did not have—namely, the main sewerage connection service. They are to get the refund now.
In my constituency I am adivsed that that refund is about £30 to £35 a year, on average. In the area of the Canterbury City Council, which is my district council, there are about 1,800 householders whose properties have only a cesspool or septic tank. I must declare an interest here. I do not come within that figure of 1,800, but I live nearby and, as we all do, I declare an interest, although not exactly proudly. We are cesspool owners. I never thought that I would make that declaration so public. One might say that there are certain days when we do not have to declare such an interest. Like Hamlet, when the wind is in the East, I know
a hawk from a handsaw.
I hope that everyone will recognise my quotation.
The refund in the Canterbury City Council area is about £30 to £35 a year, but the charge just announced by the Canterbury City Council for providing the service of collecting sewage from cesspools is remarkable. The charge has been described by some of my constituents as vindictive, because the council is charging at a rate of £10 per 1,000 gallons. An average householder creates between 9,000 and 10,000 gallons of sewage a year. According to the information I have been given by many constituents who have been to see me or written to me on the subject, that works out at about nine times or 10 times £10—in other words, £100 a year. Some constituents have calculated that they will be paying up to £120 a year for an emptying service for which hitherto, under the old system, they paid on each occasion £6·50, irrespecive of volume. They were paying in effect about three or four times £6·50.


That is £20 or £25 a year in the last two years.
We are seeing a hand-back to those 1,800 householders of £30 or £35 of a charge which has now been declared to be an illegal charge. Instead, however, they will be paying out about £100 or perhaps £120 a year for the new service.
I have been keeping an eye on you, Mr. Murton, because you might have regarded me as being in danger of reaching back in time to make a Second Reading speech. I have not wanted to do that, but I wanted to follow up a very good argument made by my hon. Friend the Member for Braintree, and merely to say that there is another side of the coin. I have tried to show that there are problems, and my goodness, my mailbag tells me just how big is the problem that I have just mentioned.

Mr. John MacGregor: I should like to refer briefly to the remarks of my hon. Friend the Member for Canterbury (Mr. Crouch). On Second Reading I referred to the possibility that the Daymond victory would be a Pyrrhic victory for many of those whose properties are non-connected. What he said has proved that that will be so for many people. In my constituency there are many who this year are facing a much higher charge, but it is still not an economic charge in relation to the cost of emptying cesspits. This will bring home the fact that many people have been subsidised in the past by the general body of ratepayers.
Amendments Nos. 13, 18 and 23, which are in my name, at first sight may appear to be directed exactly to the same arguments as those put forward so ingeniously by my hon. Friend the Member for Braintree (Mr. Newton), but they are probing amendments desired simply to raise a technical point. On the arguments of my hon. Friend the Member for Braintree—I described them as ingenious because I was very much disposed to disagree with his amendments until I heard the way in which he put them forward—he has a case, although I should much rather see the case in relation to the nationalised industries argued on the amendment in his name, Amendment No. 32, which gives us an opportunity to debate the position of the nationalised

industries. I am not satisfied that the Minister has yet given a sufficient justification for the inclusion of the nationalised industries. Although he may be right that the administration and additional costs of operating his amendments would not be great, there is a great onus on us to make this as administratively simple and as quick as possible. Even if it is only marginal, I should prefer to see that done.
I take the point regarding costs that if we delay the nationalised industries' charges for a year we are adding to the burden not of water authorities but of the nationalised industries. It is probably better to get this matter over quickly and not have this burden for a further year.
My only point in putting down Amendments Nos. 13, 18 and 23 was to raise a matter which has been put to me by a number of people, including the Rating and Valuation Association. My amendments are designed to cater for cases where claims for refunds are not determined before 1st April 1977. I realise that will not happen in many cases. It is to be hoped that nearly all the refunds will have been paid by the end of the next financial year.
Nevertheless, we have already agreed that there will be some complications in the administration and chasing up of people to whom refunds are due. It is possible that some cases will not have been settled before 1st April 1977. I am trying to find out what will happen to those cases. As the Bill stands, people with whom there are still arguments up to and beyond 1st April 1977 would not get the refunds to which they were entitled. My amendments may be technically deficient. However, if there is a problem, I hope that the Government will look at it.

5.30 p.m.

Mr. Speed: I should declare an interest, as I did on Second Reading. I, too, am unconnected. It appears that almost the entire House is unconnected in these circumstances.
My hon. Friend the Member for Braintree (Mr. Newton) made a number of important points. Like my hon. Friend the Member for Norfolk, South (Mr. MacGregor), I think that on balance there is a strong argument in favour of proceeding as quickly as possible.
We have the particular problem of the connected low-income ratepayer about whom my hon. Friend was concerned. We know that he is not entitled to a rate rebate on these charges. I do not argue that he should be entitled to such a rebate. We should keep the matter totally divorced. However, he will face a fairly considerable increase in charges.
My hon. Friend the Member for Canterbury (Mr. Crouch) referred to the problem of the unconnected ratepayer who will be faced with considerable charges for emptying his cesspool. One reason for that is that he will be bearing the costs of the water authority in treating the sewage. That was not the situation before.
It would be helpful if the Minister could advise the House how the connected low-income ratepayer can be benefited. If he is not entitled to a rate rebate but is on supplementary benefit—I ask the Under-Secretary of State to go back to his previous incarnation and give us some advice—is it possible that, if there were a considerable increase as a result of the increase in water charges, the connected low-income ratepayer might get some help from the Supplementary Benefits Commission? We are on new territory. I do not argue that such benefit should come within the rate rebate system for many reasons. I think that the Minister will agree with me about that. But there will be a problem.
I am not convinced that the answer is to delay matters. My hon. Friend the Member for Braintree has highlighted the problem in many areas. We shall listen with interest to the Minister's explanation of how the problem can be met in the interests of the considerable numbers of people who will be affected.

Mr. Alec Jones: First, I should advise the House that the Government are of the opinion that they should reject the amendment if it is pressed to a vote.
The hon. Member for Braintree (Mr. Newton) indicated that we had covered some of this ground in the previous debate. He suggested that phasing of the type he was describing would mean a saving of money for the water authorities. However, we do not think that it will save money. The total cost to the water authorities of deferring payments to the consumers concerned would, in the ulti-

mate, be increased. My right hon. Friend dealt with the administrative difficulties. Any system of phasing would of necessity increase administrative difficulties. There is no way round that problem.
I agree with the hon. Member for Braintree that we are in an intolerable position. However, we are in that position in consequence not of the Bill, but of the decision in the Daymond case.
The hon. Member for Canterbury (Mr. Crouch) referred to a hand-out to public authorities. I think that on reflection he might wish to change that phrase. It is not a hand-out. It is a repayment of illegally levied charges. The word "handout" sometimes has an unfortunate connotation. I am sure the hon. Gentleman did not mean that. The repayment of illegal charges will be of benefit ultimately to other consumers in the public sector.
I agree about the harmonisation of costs. That item will be included in the consultation paper which the Government hope to publish shortly. However, it is not relevant to this point.

Mr. Speed: The hon. Gentleman said that the repayment would be of benefit to other consumers in the public sector. Most nationalised industries are in heavy deficit. Therefore, is not the real beneficiary the Treasury?

Mr. Jones: We are trying to do everything possible to prevent public enterprises getting into deficit. Therefore, anything we can do to help reduce the deficit ought to be, and I am sure is, welcomed by Members on both sides of the House.
The hon. Member for Canterbury referred to the charges facing his constituents. The emptying of cesspits was the responsibility of local authorities who are now moving towards charging the economic costs involved in that operation. I was staggered that so many right hon. and hon. Gentlemen opposite apparently lived in cesspools. I do not mean that. I mean that so many of them live in properties where cesspits are the rule rather than the exception.
The hon. Member for Norfolk, South (Mr. MacGregor) said that he regarded his amendments as probing amendments. I shall deal with them later. The hon.


Gentleman specifically asked how we proposed to deal with claims which might not be met before April 1977. As I said on Second Reading, we intend to use a degree of publicity to try to ensure that people are aware of their rights and how they should make claims. I should point out that the duty to make the refund continues until it is discharged. It does not end in April 1977.
The hon. Member for Ashford (Mr. Speed) asked me to draw on my previous incarnation—I do not know whether that is the right word—or service in expressing his concern about the connected low income ratepayer. This is a matter of considerable concern to everyone. Rate rebate is no longer available for this service because it is outside the scope of local government.
The hon. Gentleman asked about supplementary benefit. I should not like to speak on behalf of the Department, but I will do so. If I am wrong, I will write to the hon. Gentleman about it. The Supplementary Benefits Commission has discretion to take account of increased charges of this kind which supplementary benefit claimants are asked to meet. I am sure that the Commission will exercise that discretion. If I am wrong, I will seek to correct that impression.

Mr. Speed: Could the same rules be extended to the type of constituent about whom my hon. Friend the Member for Canterbury (Mr. Crouch) spoke, who might be unconnected but faced with a heavy increase in charges? I do not want to press the Minister for a definitive answer but that is the other side of the coin.

Mr. Jones: The hon. Gentleman presses me too far, but I take his point. The Supplementary Benefits Commission would be concerned not with whether the complainant was connected or unconnected but merely about his weekly outgoings. I am sure that what I have said applies in both cases.
We ask the House to resist Amendment No. 5, which seeks to delay refunds to public sector bodies until the financial year 1977–78. The amendment implies that the burden on individuals should be reduced at the expense of public sector bodies. There are several reasons why that is not desirable. It is not

desirable to prolong the agony involved in settling the problems that were created by the Daymond decision any longer than is necessary. It is better and administratively cheaper to deal with it in one year rather than two.
However, in all equity I do not understand why public corporations should be treated differently. Illegal charges are still illegal whether paid by public corporations or anyone else. There is no obvious reason why gas and electricity consumers should be required, in effect, to subsidise water authority consumers. That would be the result of making the nationalised industries wait for a year.
The amendments in the name of the hon. Member for Norfolk, South would allow the water authority to phase recovery, whereas the amendment in the name of the hon. Member for Braintree would compel water authorities to do so over either two or three years. There cannot be an hon. Member who is not sympathetic with the objective of minimising the cost to connect consumers. Neither I nor any other Minister is happy at the prospect of an increase in charges averaging about 21 per cent in one year.
To spread the recovery over a number of years would involve an increase in the total cost which, in the end, the consumers—whom we are all anxious to protect—would have to bear. If the water authorities do not recover the full cost next year they will run into deficit on their revenue accounts and, thus, will have to borrow and pay interest to cover those deficits. Phased recovery inevitably will lead to an increase in administrative difficulties and costs. So far we have been fortunate that the water industry, unlike some other industries, has managed to avoid running into deficit. I hope that the hon. Member for Ashford will agree that it is in no one's interests for the water authorities to run into such deficits.
To the extent that the amendments in the name of the hon. Member for Norfolk, South give power to phase recovery, it is agreed that the water authorities should have the option of phasing if they so wish. They are responsible bodies and should make the choice themselves. The Bill does not prevent the water authorities from doing so. The Water Act already allows them to


balance their books, taking one year with another. Therefore, the hon. Gentleman's amendments are not necessary, because that provision is already included.
For those reasons we do not think it proper to accept the amendments.

5.45 p.m.

Mr. Newton: I find all the arguments which the Minister has advanced profoundly unsatisfactory. My amendments are meant to be taken together. There are two sides to them—a delay of some refunds and a delay of some recoveries, which would be to the net benefit of the water authorities in the next financial year. I do not want to speak to those amendments except as a package. Even if I were willing to take each side separately I could not let my heart bleed for the interest charges which the water authorities would have to pay if there were a delay, because those authorities have had this money interest-free for two years already and, therefore, have already benefited from it. Why should my heart bleed over the loss that they might incur when no one proposes to do anything about the benefits that they have already enjoyed over the past few years? That argument does not stand up.
There is also the argument about who is subsidising whom. I should be happier if there were the remotest chance that the unfortunate nationalised industries would refund the additional price increases that they levied on their customers. However, there has been no suggestion of that. If there had been, the Minister knows very well that his Treasury colleagues would have put a clamp on his mouth in 10 seconds flat.

Mr. Alec Jones: Nor is there any suggestion that other industries will pass on the benefit of refund to other consumers. The hon. Gentleman's comments must apply not only to industries in the public sector but to industry right across the board, otherwise he is being unfair.

Mr. Newton: That is a fair comment to make. There is, as I have said, the tangled question of who is subsidising whom. Industrial and commercial ratepayers outside the public sector will have to pay tax on these refunds. I should like further information on this. Rates are an allowable business expense against profits and will, therefore, have to be

accounted for to the Treasury for tax purposes. The Treasury will get a claw-back from private industry and commercial undertakings. It will not get a claw-back from the public sector because that sector, broadly speaking, does not make profits and will, therefore, pay no tax.
Although I shall not press the amendments, as I am sure the Minister expected, the arguments advanced against my proposals are not watertight. They do not stand up on the ground of costs. It is far too tangled a question to decide who subsidises whom. However, I believe that the net overall effect of the proposals will be to benefit the Treasury because there will be a reduction in the deficits of the nationalised industries which the Treasury would otherwise have to finance, coupled with the tax claw-back from private industry. Therefore, we are talking about a small increase in taxation financed at the expense of sewerage-connected ratepayers. I do not find that particularly easy to justify. However, I shall seek to withdraw the amendments.

Mr. Graham Page: I want to ask the Minister what he meant by his last few sentences. He said that water authorities would have power to phase refunding. What are we talking about in these amendments? The Bill begins
On 1st April 1976 it shall become the duty of every water authority to refund…".
That will withdraw the water authorities' power under the 1973 Act to phase any repayment of this sort. However, the Minister said that the water authorities would have complete power to phase, and refund by instalments—to delay repaying these industries until next year, the year after or the year after that. Is that the case in favour of these mandatory words at the beginning of the Bill?

Mr. Newton: Perhaps the Minister will comment on that when I have finished. I would not want any lengthy comment on what I have said, as long as his arguments can be clarified.
Perhaps he could say something about cesspool emptying, the arrangements for which vary widely in different areas. The implication of what my hon. Friend the Member for Canterbury (Mr. Crouch) said is that his local authority has been


charging people the sewerage charge and emptying the cesspools free of specific charges. My local authority last year charged me half the sewerage charge and also a sum for emptying the cesspool. I suspect that we do not have enough information about the situation in different areas to judge the Bill properly.
What does the Minister think is the broad picture? Are local authorities emptying cesspools or not and are they doing so free of charge or not? We cannot consider the Bill properly until we know the basis on which we are discussing it.

Mr. Alec Jones: By decision of the House, charges for emptying cesspits are a matter for local authorities and not for water authorities. Regional variations are considerable, for the charges levied not only by the local authority but by the organisation emptying the cesspit. In some areas, it is done privately, in others by local authorities and in yet others by a mixture of the two.

Mr. Crouch: Is it not a fact that water authorities may decide to charge local authorities for the service of sewage disposal and that the local authority will then decide what rate it will itself charge? I understand that the Southern Water Authority charge to district councils for this service is £2·44 per thousand gallons and that then the local authority may decide to charge up to £10 for that service. Is that so?

Mr. Jones: I am told that the water authorities are empowered to charge for the treatment of sewage and not for the emptying of cesspits. It is the treatment which benefits the consumer. As for Clause 1(1), I confirm that water authorities have the power to phase recovery of these costs if they wish to do so.

Mr. Newton: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Miss Janet Fookes: I beg to move Amendment No. 53, in page 1, line 14, at end insert—
(c) the court fees and costs of persons summoned for arrears in respect of properties without sewerage or water supplies on the relevant date".

The amendment seeks to put right the anomaly, which I mentioned on Second Reading, that certain ratepayers who were disconnected felt under no legal obligation to pay the charges which, by the Daymond judgment, were found to be illegal. Nevertheless, some district authorities went ahead and summoned them and they were involved in court costs. In the event, it was found that they need not have paid the charges, and it seems unfair that, although refunds will be made, they will not, apparently, receive any refund of court costs.
Many people paid up because they feared that the bailiffs would come to collect their furniture if they did not. The Plymouth firm of solicitors who acted for Mr. Daymond think that many thousands of people may have been involved and that in South-East Cornwall at any rate people faced an average charge of about £1·60. It seems fair that refunds should be made on this score as well as the basic refund.
I hope that the Minister will accept the amendment or at least its spirit if, as we are frequently told, the drafting is defective. That always seems the swan song on these occasions. I look forward with interest and hope to his response.

Mr. Robert Hicks: I support the amendment so ably moved by my hon. Friend the Member for Plymouth, Drake (Miss Fookes). As she said, this matter arises directly out of action taken by the Caradon District Council in my constituency and the subsequent decision of Liskeard Magistrates' Court. The court fees and costs of those summoned for arrears in respect of properties without sewerage or water supplies on the relevant date should be added to the list of refunds which will be made from 1st April this year to those charged for sewerage or sewage disposal who were not linked to the mains.
The Caradon District Council made a firm decision to pursue the enforcement of payment of the sewerage rate from unconnected ratepayers even while the litigation was in progress. The Liskeard Magistrates' Court acceded to that request and refused to grant an adjournment pending the outcome of the litigation. I do not know whether this situation is typical of the whole country or exclusive to my part of the world. My


evidence is that local authorities elsewhere were able to delay enforcement action and that courts were prepared to grant adjournments.
That did not happen in South-East Cornwall. Distraint warrants were issued against many people who were not connected to the main sewarage system and who refused to pay the sewerage charge. Subsequently, to avoid a visit from the bailiffs, they felt that they should pay. I can confirm that the average court costs involved in the Caradon area amounted to £1·60. These people were obliged to pay that amount, but the subsequent ruling by the Law Lords confirmed their original view. They should therefore be included as eligible for a refund.
It is essential to write this provision into the Bill or the court costs might not be refunded by either the water authority or the district council, who may hide behind the argument that they have no legal authority to do so. I hope that the Government will consider this request sympathetically. The Minister of State said earlier that we should be dealing with this problem on the basis of equity. No problem arises about identification. I therefore hope that we receive a favourable response from the Minister.

6.0 p.m.

Mr. Farr: I, too, believe that the amendment deserves support, and I hope that the Minister will make the necessary concession. We are talking about another fair deal for the customer, rather in line with the question of interest charges. We are making a plea that court fees and costs be refunded.
There are several instance throughout the country in which people have had to pay court fees and costs. It is common sense that the matter be rectified. I can see that the Minister is anxious to jump to his feet to accept the amendment as one of common sense and plain justice. The inclusion of words to this effect in the Bill could save much litigation when the Bill is enacted.

Mr. Arthur Jones: I support the amendment, which was argued in principle on Second Reading—this is column 692 of Hansard for 12th February—by my hon. Friend the Member for Plymouth, Drake (Miss Fookes). There-

fore, the Government have had a chance to consider the amendment and I am sure that they are ready with an acceptable reply.
Rectification may not be best done through repayment of water charges. Would it not be simpler for proceedings of this nature to be declared null and void and for a refund of the court fees and costs to be made by the court in question without involving the regional water authorities? In fairness, the matter must be dealt with. I hope that the Minister will respond accordingly.

Mr. Alec Jones: I will not disappoint the hon. Lady the Member for Plymouth, Drake (Miss Fookes): I will deal the swan song to the amendment immediately.
The amendment is technically defective. It would allow court fees to be repaid to people with unconnected properties who were summoned for arrears in their general rates. However, that is not the reason for the Government not accepting it.
The hon. Lady raised this point on Second Reading. I accept that it is a good point. If only we were having to deal with good points and find the right answers, life would be easy. I agreed on Second Reading to consider the matter. I have done so. Although I have the greatest sympathy with the point made by the hon. Lady on Second Reading and again today, I must tell her that the Government cannot accept the amendment.
It is a question of deciding what is practicable. Where can we draw the line in cases such as this? The hon. Lady mentioned the figure of £1·60 for court fees and costs. For some people £1·60 is a considerable sum. For others, it is a relatively small sum. If court fees are to be refunded, why not solicitors' costs and the amount spent on telephone calls, postage, and travelling expenses, and people's own assessment of the value of their time?
We have found that there would be insuperable difficulties about trying to define legitimate costs. The Bill is about the refund of illegal sewerage charges and not about other charges. Because of the difficulties about drawing a line in a reasonable place, we decided, having considered the matter, that it was not possible to go any wider than the Bill proposes.
If there are cases of considerable and genuine hardship I am sure that the water authorities themselves will be prepared to consider sympathetically what action they can take. I sincerely regret that I am unable to move on the lines suggested by the hon. Lady.

Mr. Graham Page: I have never heard such a disgraceful speech from the Minister. I know that he was greatly distressed about it. He was trying to get the best that he could get from his brief. He failed. He suggested, in effect, that those who resisted an illegal claim will now have to bear their own costs. The amendment asks that such people be refunded their court fees and costs. I understand that to mean the normal party and party costs in litigation.
I suppose that I should declare an interest as a solicitor. However, I was not involved in any cases of this type. I wish I had been.
It is simple to get the costs taxed by the court. This happens in every case, whether one wins or loses. Every figure in a case can be made definite. It does not matter whether the costs amount to 60p or £6 or £6,000. It is a matter of principle. My hon. Friend the Member for Plymouth, Drake (Miss Fookes) mentioned £1·60. I presume that is the fee on the summons or distraint warrant.

Mr. Denis Howell: The right hon. Gentleman charges much more than that.

Mr. Graham Page: Indeed. Many people from whom money was illegally claimed felt as a matter of principle that they should fight the issue. They may have instructed solicitors, who, in turn, may have instructed counsel. These people were told that they were in the wrong but the Law Lords later decided that they were in the right. Therefore, the expense to which they were put should be refunded. All they need to do is to go to the water authority with the receipt for their court fees and the bill from their legal advisers. They should then be refunded their expense.
I hope that the Government will not go away with this stain on their character of having deprived of his costs the ordinary person who, like Hampden in the past, tried to stand up for his constitutional rights.

Mr. Crouch: We have reached a remarkable situation. The Minister spoke sweet, soothing words to my hon. Friend the Member for Plymouth, Drake (Miss Fookes) as though he was about to accept her amendment. He then brushed it aside, presumably because he had been advised by officials in his Department that the matter is too difficult for them to sort out.
The Committee cannot accept such an attitude from the Minister. It is not good enough. We are here to represent our constituents but, above all, we are here to ensure that Parliament delivers justice and not injustice.
I am quite worked up about this. We are talking about illegal charges—that is the phrase Ministers have used today. Because of those illegal charges, unnecessary costs were incurred. The costs do not amount to just £1·60. There are such items as travelling costs, solicitors' costs and telephone calls.
The Minister must return to his Department and tell his civil servants to work this out. I have a letter here from the Southern Water Authority mentioning a budget of £71 million. Let the water authority add a few thousand pounds to that to cope with this injustice. The Minister must not expect Parliament to condone an injustice. The Government's attitude is utterly and completely wrong, and we cannot accept it.

Mr. Speed: I must admit that when my hon. Friend the Member for Plymouth, Drake (Miss Fookes) first spoke on her amendment, and when I heard her remarks on Second Reading, I was not entirely convinced, but as the debate has continued I have become more and more convinced that an important question of principle is involved. Presumably Mr. Daymond received his costs at the end of the day. Presumably he is not out of pocket. However, those who might have jumped into the breach if Mr. Daymond had dropped dead may be considerably out of pocket.
We are talking about refunds of approximately £60 million. My guess is that the aggregate amount of the court costs spread over a few thousand people will be between £20,000 and £40,000. Parliament would emerge from this debate with a rather cleaner taste to the


mouth if it could meet this specific point. I know that the Minister has tried to be helpful and I appreciate that he is a fair man, but it is no answer to say that if people go to the water authorities they will find a sympathetic response. Many people have their pride and will not wish to do that.
I understand from some of my hon. Friends who are legally qualified that reasonable costs could be calculated. I hope that the Minister will reconsider his position. Justice should not only be done but should be seen to be done for those who, through the fault of Parliament, have been disadvantaged.

Miss Fookes: I am as gratified by the enthusiasm shown by my hon. Friends as I am disgusted by the mean approach of the Minister. It seems unfair that people should be asked to bear their costs. I do not accept that the amendment is not practicable. The difficulty is that the Government do not wish to respond. I am not prepared to withdraw the amendment.

Mr. Alec Jones: This is not a question of not wishing to act.

Mr. Farr: Then do something.

Mr. Jones: It is all very well for the hon. Gentleman to make that sort of remark from a sedentary position. Perhaps he will do me the courtesy of listening to me again. I do not deny that it is relatively easy to make an assessment of legal costs, but the legal costs which some people were forced to meet might have been infinitely less than the real costs which were incurred by many others. That was the point to which the hon. Member for Canterbury (Mr. Crouch) drew attention when he talked about bus fares.
We are in a genuine dilemma. If we are to meet these costs, are we to confine repayments to those who took court action or are we to draw a line which will include the real costs which were forced upon those who did not take the matter to court? I have in mind those who wrote their own letters, made their own telephone calls and conducted their own case at court. They might have spent considerable time undertaking those tasks. That is the difficulty which

I have tried to put to the Committee. To say that the Government have displayed a disgraceful attitude is to misuse the word "disgraceful". One could describe other elements of this matter as being disgraceful.
6.15 p.m.
I do not know whether the hon. Lady will believe me, but between now and when the Bill reaches another place I shall reconsider the matter to ascertain whether there is some means of meeting her case. I ask the hon. Lady to accept that it is not rejected because of unwillingness on our part to reconsider the matter or unwillingness to find a solution. We are faced with genuine difficulties. How would a man who travelled 50 or 60 miles to visit an authority by bus or car a year or 18 months ago prove to the authority that he made such a journey? It is asking a lot of us to frame regulations to meet such cases. Nevertheless, I am prepared to reconsider the matter.

Mr. Graham Page: I think that the Minister has come round to our way of thinking to a considerable extent. We are grateful for that.
It is not difficult to determine court fees. That is the first item. The second item is costs. I take that to mean legal costs. Perhaps witness expenses are included as well. Such expenses are not difficult to ascertain. There will be a solicitor's bill of some sort for legal costs. Solicitor-and-client costs can be cut down to party-and-party costs. That is happening in litigation all the time. If the litigant has appeared in person he cannot expect to be paid for his own services and for advising himself, but he can expect to be paid his attendance as a witness in his own case. His costs of attending, for example, is the sort of item that is dealt with every day by the courts.
If a claimant goes to a water authority with a note of his expenses, and if the authority thinks that he is being extravagant, there can be a compromise. If there is no compromise the issue can be taken before a taxing master. Again, that is happening every day. When there are town planning appeals and the inspector advises the Minister that the costs


should be paid by one side or the other, the costs can be negotiated between the Department and the claimant. If negotiations fail the matter goes before a taxing master.

Mr. Alec Jones: Is there not a difference between trying to deal with costs that might be incurred at this moment or in the future and the situation with which we are trying to deal—namely, establishing the real costs of an action that may have taken place more than 12 months ago?

Mr. Page: I assure the hon. Gentleman that costs that have been incurred a long time ago are often taxed. People always complain about the delay in the law, but costs are often taxed 10 years after being incurred. The courts find no difficult in doing that.
I am sure that the parties would not find any great difficulties in compromising over costs. If we have the Minister's recognition that the Government wish to recompense those who were justified in fighting a claim and who spent money in doing so, in legal costs, court fees and travelling expenses, I am sure that my hon. Friend will be happy to leave the matter to the Minister for his reconsideration

Mr. Farr: When, from a sedentary position, I inadvertently said that I thought the situation was disgraceful, I did so because I thought it was disgraceful that we did not have the benefit of the presence of one of the Law Officers. We have a complex Bill that is based on a narrow decision by the Law Lords. One of the Bill's sponsors is the Attorney-General. I think that the Bill would make much more rapid progress if the right hon. and learned Gentleman were present. If we had the advantage of his presence the Government Front Bench would know the legal answers. I certainly do not know them, and I do not suppose that many other hon. Members have the necessary legal knowledge.
I am not a solicitor, but I should have thought, as my right hon. Friend the Member for Crosby (Mr. Page) has said, that it is not beyond the capacity of the legal profession to define the costs that

are applicable and to include such a definition.
I thank the Minister for what he has said. Once again, I urge him to acknowledge that it would be frightfully nice if one of the Law Officers looked in to see how we were getting on and to see whether he could help.

Mr. Crouch: I cannot join my hon. Friend the Member for Harborough (Mr. Farr) in wishing to see the presence of one of the Law Officers. I am very happy to leave the matter to the present occupants of the Government Front Bench.
This is a short debate on an important amendment. It might be a small matter, but we think it significant and important. There is an injustice that is measured, perhaps, in a few tens of thousands of pounds. Nevertheless, I think that it is an important matter.
From my position it is very difficult to know what is going on on the Government Front Bench. I do not know whether, on the Government Front Bench, a nod is as good as a wink or a smile as good as a scowl. Perhaps the Minister will say whether he is considering the arguments put to him. We do not wish to criticise him personally, because we should like to see him exercise influence over his officials rather than the other way round.
When the Minister was speaking I sensed that he had been fed with all kinds of difficulties by his officials and that they were taking the view "It is extremely difficult to do these things and you cannot expect us to produce the necessary forms to cover situations involving people who travel five miles or 50 miles." Only this afternoon hon. Members have been meeting constituents who have been putting to us the enormous costs of travelling on buses, let alone trains, about which we shall be hearing next week.
I hope that the Minister will assure the Committee that he appreciates the force of the arguments that have been put to him and the reasonableness of our plea for justice. I hope that he will go back to his Department to see whether it is possible to accommodate our suggestions, particularly in view of the helpful remarks made by my right hon. Friend


the Member for Crosby (Mr. Page), as an ex-Minister and also as a lawyer. Will the Minister give further consideration to this matter?

Mr. Alec Jones: I am prepared to look again at this matter to see whether a scheme such as that proposed by the right hon. Member for Crosby (Mr. Page) can be implemented. However, I make no commitment, because I believe that there are still genuine difficulties.

Mr. Hicks: I wrote to the Minister of State on this matter on 5th February. May we be told how widespread is the problem? Are we talking only about South-East Cornwall, or is the problem much more general?

Mr. Denis Howell: I should need notice of questions about letters written to me on 5th February. However, I can tell the hon. Gentleman that the problem is not confined to one part of Cornwall. I support what was said by my hon. Friend the Under-Secretary of State for Wales. We shall examine the matter. The difficulty lies in the question where one should draw the line. If it is possible to define the costs incurred and they can be proved, I believe that it is reasonable to seek to meet the point. On the other hand, it would be unreasonable to try to meet all sorts of other costs that cannot be proved at this stage, even if they are incurred. In that spirit we shall look again at the matter to see what we can do, although I repeat that we make no commitment as to action to be taken at a later stage.

Miss. Fookes: I warn the Ministers that I shall look upon their activities with a beady eye, but in the light of the Minister's assurance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Denis Howell: I beg to move Amendment No. 6, in page 2, line 8, leave out
shown as a seperate item in the valuation list" and insert "liable to be rated".

The Chairman: With that amendment we may also take Amendment No. 7, in page 2, line 11, leave out
it was first so shown" and insert "liability to a charge began
and Government Amendments Nos. 8, 9, 10, 14, 16, 29, 30, 39, 40, 46 and 47.

Mr. Howell: After the involved argument on the previous amendment, this series of amendments seems to be even more involved. But I assure the Committee that these are technical matters, and I am sure the Committee will agree that they are necessary. I hope that the hon. Member for Harwich (Mr. Ridsdale) will conclude that this series of amendments meets the interesting point that he makes in his Amendment No. 7.
I should like briefly to explain the situation. These amendments are intended to meet the case in which a new property is completed during the year, without sewerage, but is not entered on the valuation list until some time later, which may be after the end of that financial year. The ratepayer will have paid the sewerage charge, along with the rates, from the date of completion and should clearly have that charge refunded. The amendments will tie eligibility for refund to the date on which the property became liable to be rated, and so to the date from which any sewerage charges were paid. I hope that the Committee will accept the amendment.

Mr. Arthur Jones: I wish to ask the Minister about the occupancy of properties initially. A property could appear on the rating list as an initial assessment, but would it not be more equitable for the date to be that of rateable occupation—which is somewhat different from the way in which the amendment is drawn?

Mr. Denis Howell: I do not think the hon. Gentleman is right, but I undertake to examine the matter and to communicate with him. If the hon. Gentleman is right, we shall take steps to alter the provisions elsewhere.

Amendment agreed to.

Amendments made:

No. 8, in page 2, line 11, leave out 'shown' and insert 'liable'.

No. 9, in page 2, line 13, leave out 'the occupiers' and insert 'persons liable to be rated in respect'.

No. 10, in page 2, line 14, leave out 'which have' and insert 'with'.

No. 14, in page 2, line 16, leave out 'the occupiers' and insert 'persons liable to be rated in respect'.

No. 16, in page 2, line 16, leave out 'to which they supply water' and insert 'for


which a supply of water is made available by them'.—[Mr. Denis Howell.]

Mr. Ridsdale: I beg to move Amendment No. 24, in page 2, line 25, leave out paragraph (a).

The Chairman: With this we may take the following amendments:

No. 25, in page 2, line 28, leave out 'or indirectly'.

No. 26, in page 2, line 29, leave out 'or surface water or both'.

No. 27, in page 2, line 29, after first 'or', insert 'for foul water and'.

No. 28, in page 2, line 29, leave out 'or both'.

No. 31, in page 2, line 31, leave out 'facilities which drain to'.

Mr. Ridsdale: I mentioned this matter on Second Reading, but since, in the meantime, I have received more information on the subject, I come to this debate with even more vigour.
When I originally mentioned this matter I thought that the larger domestic ratepayers would benefit far more than would the smaller ratepayers and non-domestic ratepayers. I gather that the figures show that these provisions will affect 60 per cent, larger users, 20 per cent, domestic ratepayers and 20 per cent, non-domestic users. My fear is that the Bill as drafted will exclude some people who otherwise would have benefited.
Many occupiers—ratepayers—will be angry if the Bill is not amended. The words in page 2, line 29, "or surface water", and in lines 31 and 32
the use, in respect of the hereditament, of facilities which drain to a sewer or drain so communicating
could be interpreted so as to debar a number of hereditaments from eligibility for refunds. May we be told whether that is the case? I wish to safeguard the interests of the smaller domestic ratepayers, and I hope that we may be given an assurance on that point.
The second point I wish to mention concerns the benefit accorded to a hereditament from "run-off" by gravity which results in the surface water flowing to a street gutter. Should that be regarded as one of the services paid for on the general rate levy of the district

council, as should the disposal of surface water which drains directly to a surface water sewer?
6.30 p.m.
I fear that those two matters may work against some of the domestic ratepayers. For that reason I suggest that paragraph (a) should be excluded, although I shall wait to hear the Minister's answers to the points that I have made. I hope he will assure me that many domestic ratepayers will not be excluded, but that he has taken them into consideration in his calculation of 20 per cent.

Mr. Jim Marshall: I have a great deal of sympathy with the hon. Member for Harwich (Mr. Ridsdale). I wish to bring to the Committee's attention some of the difficulties that the hon. Gentleman has foreseen, but I should like to illustrate those difficulties in greater detail than did the hon. Gentleman.
I sympathise with my right hon. Friend, because he has the extremely difficult job of trying to sort out the consequences of the Daymond case. Although I do not wish to drag in all the points made on Second Reading, I cannot help feeling that there are easier ways of dealing with these difficult cases.
It is essential that we do not make the situation worse than that which pertained under the previous legislation. I believe—I know that this is the feeling of district treasurers throughout the country—that lawyers could have a field-day with the Bill and that domestic ratepayers who are now anticipating refunds are likely to find that they do not receive those refunds. It is essential that we make the position clear here and now.
The root cause of the difficulty lies in Clause 1(7)(a), and especially in the inclusion of the words "surface water". It is to those words that I wish to direct the bulk of my remarks. We shall have a nightmare over identifying the place to where the water drains—whether it be into a public sewer carrying foul water or into a public sewer carrying surface water. We shall also have to establish whether it goes into those respective sewers directly or indirectly. One can envisage a situation in which making decisions in particular cases could not be done readily, and would take a great deal of time. Moreover, we could well face


the situation in which domestic ratepayers have to pay not only the sewage disposal charge for emptying their cesspool but, at the same time, the general service charge. I should like to quote a few examples to illustrate my view.
One example is a house, or any other kind of building, with a cesspool in the middle of a field, where the surface water obviously drains naturally. Under those circumstances the conditions for receiving a refund are satisfied and the people concerned will, in future, have to pay only the charge for emptying the cesspool. But what will happen if the house is not situated in the middle of a field but does have a cesspool and a drainage pipe carrying the water from the roof into the garden? There is no direct link between the garden and the adjacent highway but undoubtedly there is an indirect link between the drainpipe and the highway, because in the highway there is a drain into which the water from the house flows indirectly. Does that constitute a ground for qualifying under the Bill? Will the owner have to pay the sewerage charge in future, but receive a rebate for the past? Does the indirect linkage mean that in future he will have to pay not only the sewage disposal charge, for emptying the cesspool, but also the general service charge? That is one type of difficulty that could arise.
My right hon. Friend may say that common sense should and will prevail in future. However, past experience, especially in the light of the Daymond decision, shows that common sense does not necessarily prevail. Therefore, we cannot accept that there are easy or ready answers to these questions.
Another example is that of a house which has a cesspool that is connected via a drain-pipe, sewer or drain to a soak-away some distance from the house. The local authority will have to ascertain whether the water from that soak-away goes into a public sewer, either directly or indirectly. It cannot automatically assume that it will go into a sewer. In-deed, in most cases it will not. Therefore, people in such a situation will qualify for the exemption in the future and the rebate for the past. However, there may be one or two cases in which the water from the soak-away goes into a public

sewer carrying either foul or surface water. The local authority in that instance cannot assume that neither of the conditions is fulfilled.
Another example is that of a house with a cesspool, a drain-pipe and a sewer or drain leading into a stream into which the surface water drains. Most streams are not public sewers. However, in some instances a stream is a public sewer. Therefore, we shall have the situation in which some domestic ratepayers will receive advantages under this legislation. They will receive a refund for the past and will pay only the sewerage disposal charge in future. However, due to the anomalies in the drafting of the Bill other ratepayers, where the stream is registered as a public sewer, will not receive benefit and in future will have to pay for the cesspool to be emptied, plus the general service charge. That is the type of anomaly which I hope the Committee will not allow to arise under this legislation.
Yet another example is that a house with a cesspool but with a drain-pipe directly linked with a sewer or drain leading to the highway in which there is a drain-away. The local authority will have to determine whether the drain in the highway is connected, directly or indirectly, to a public foul water or surface water sewer. In some cases it will be, but in others it will not. In the cases where it is, the people will receive benefit, but in the cases where it is not they will not receive benefit. I do not believe that we can allow that type of situation to arise under this legislation.
I have attempted to draw the Committee's attention to the undoubted difficulties that will arise.
I should now like to refer briefly to advertising hoardings. I make no point about the virtue, or lack of virtue, of advertising. Moreover, I am not a rating expert. I say that in case the right hon. Member for Crosby (Mr. Page) later corrects what I say. The advertising hoarding itself is not rated, but the right to advertise is. One cannot level a general service charge on a right and one will not be able to level a general service charge on the advertising hoarding. If one goes round the large towns one sees that many advertising hoardings have gutters to take away excess water. The water from the


advertising hoardings undoubtedly, either directly or indirectly, goes into a public sewer carrying either foul or surface water. However, even though the owners of the hoardings are using the sewerage facilities provided by the regional water authority they will not be eligible to pay sewerage charges. Moreover, they will not be eligible to pay the general service charge. That strikes me as rather stupid. I mention it to illustrate the difficulties.
I ask my right hon. Friend to think again. I put such a suggestion forward when we discussed another part of Clause 1. I apologise for not being present when my right hon. Friend gave his reply. However, I assume from his present countenance that, in any event, it would have been negative. This point is, perhaps, the crux of Clause 1 and will be the main source of difficulty and irritation amongst ratepayers. Something must therefore be done. I do not expect my right hon. Friend to withdraw subsection (7)(a), but we must recognise that it is the inclusion of the words "surface water" that will give rise to the bulk of difficulties to be faced by local authorities.

Mr. Eldon Griffiths: I apologise to the Minister for not having been able to be present earlier because of other parliamentary engagements. The hon. Member for Leicester, South (Mr. Marshall) has done a service to the Committee and his constituents by illustrating some of the practical ramifications which can arise in this complex area. I support my hon. Friend the Member for Harwich (Mr. Ridsdale) in what he said about the term "surface water" and, in paragraph (a)(ii), the phrase "drain so communicating". On a first reading of (a)(i) almost no one would appear to qualify for relief because it could certainly be held that very few premises in this country do not in one way or another drain off, possibly through the subsoil, to one of the conduits referred to in that subsection.
I do not suggest for one moment that on a Bill which the Government rightly want to make progress they should accept an amendment to strike out a clause, but I hope that the Minister will discuss with his advisers whether "surface water" could exclude almost anyone from getting relief. Under the term "drain so commu-

nicating" one could construe that to mean that by it almost any form of runaway of foul water would be covered, and that that, therefore, could disqualify a person not connected to the sewerage system from receiving relief.
A good deal of the problem arises from the definition of "a public sewer" I took the trouble to look up the definition, which is described in this Bill as having the meaning assigned to it by Section 38(1) of the Water Act. I have more than a passing familiarity with that Act. The relevant section says that a public sewer has the meaning assigned to it in the 1936 Local Government Act. I am not, therefore, very much wiser, but a more precise definition is required, possibly on the face of this Bill, to avoid any confusion.
In layman's language I believe that what is intended is that people should be able to recover their charges if it can be shown that the arrangements they have do not communicate with what the local authorities previously understood to be a conduit that took foul water to a sewage works. In view of the legal difficulties that there have been over this issue we must get the matter right this time. I hope that the Minister will not hesitate, if necessary, to include a lengthy definition clause at the end of the Bill to avoid any confusion.

6.45 p.m.

Mr. Graham Page: The Committee must be indebted to the hon. Member for Leicester, South (Mr. Marshall) for the examples he gave; they made it easy for us to understand the difficulties which will arise if the clause is unamended.
I cannot understand why the draftsmen chose to break away from the definition in the order. This was understood by the local authorities and it would be quite easy for them to continue to apply it. Yet for some reason the words have been apparently deliberately changed. The subsection says
a public sewer provided for foul water or surface water or both".
The order with which the local authorities have now become familiar contains the words
foul water or foul water and surface water".
so that the words "or both" come out. That is exactly what is contained in Amendments No. 27 and 28. If those


words in the order were included in the Bill that would meet the examples given by the hon. Member for Leicester, South. In every case it would have to be shown that foul water was involved. I do not think it would be difficult for the local authorities or the water authorities to say which sewer carried foul water. It would not matter whether it carried surface water.
Perhaps I might assist my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) in his search for a definition of a public sewer. In my student days I always understood that a drain drained one house and that a sewer drained two or more. I do not know whether that definition stands in law. I have not examined the 1936 Act. I hope that a full definition may be put in the Bill.
I have one further point which supports Amendments No. 27 and 28 and a return to the wording in the order. The Explanatory and Financial Memorandum says:
Clause 1(7) defines the properties in respect of which sewerage charges are to be refunded: in general, refunds will be made only for properties which are totally without a sewerage service from the water authority".
I am sure that in ordinary language one would not understand a surface drain only to be a sewerage service. I hope that we may return to the wording of the order which the water authorities and the local authorities understand and which is embodied in the amendments.

Mr. MacGregor: I wish to speak to Amendments Nos. 27 and 28 which have a marginal advantage over Amendment No. 26 in that they are in line with the original definition in the order. I have four reasons for doing so.
The first concerns the question of administrative simplicity and cost saving for the local authorities. When he was dealing with the first amendment today the Minister said that it would be much easier for local authorities to identify and trace those to whom refunds should be paid compared with the situation before the 1975 order. That is correct, but, of course, it would be much easier still if we simply provided a definition in line with the 1975 order. My district council and others from which I have had representations have made it clear that they will have to go through all the rating details again in order to discover

exactly who under the new definition should get a refund. In some cases it will be extremely complex and time consuming for them to do so.

Mr. Hal Miller: I thought I heard the Minister say that the 1975 order had enabled the Government to identify the premises in question, so presumably the Minister must follow the logic of that remark and accept what my hon. Friend is saying.

Mr. MacGregor: My district council and others say that they will have to retrace the different householders because the thing is not on all fours with the original 1975 order. Although it is easier because they know who is unconnected to foul sewerage, they will have problems of the surface water drainage, and they will have to look through those, and in any case it will be difficult to establish what is the position. There are still considerable administrative complications, which could be solved by this change.
One argument which the Minister can put forward for the change is that in a sense it will save money for those ratepayers connected, because by this definition there will be fewer ratepayers unconnected. I suspect that at the end of the day the administrative savings in going back to the 1975 order will outweigh that. That is the first point, that it would greatly aid local authorities.
Secondly, there is the inconsistency of the Government's position. I have here a letter from the Department of the Environment to all the chief executives of district councils. The letter is dated 23rd January, and it makes clear that the scheme is designed to follow some of the principles in the administration of the 1975 order and the 50 per cent remission, but then it says:
The legislative proposals include a definition of an unconnected property which is different from that used in the 1975 Collection of Charges Order.
Later it says:
Some properties which qualified for a 50 per cent remission last year will not be eligible for refunds.
It is inconsistent to try to base the scheme as much as possible on the 1975 order in certain respects but not in others.
My third point follows from that last quotation, because it will be difficult to


put across to many ratepayers who qualified for the 50 per cent remission last year that they do not qualify for the refund. I should not be able to explain that on a public platform. It would be much more simple to go back to the position that those who got the 50 per cent. remission will get the refund. It will be difficult to explain the whole process to ratepayers, and we should not be put in that difficulty.
My next point was made by the hon. Member for Leicester, South (Mr. Marshall) both in his speech on this amendment and earlier, and that is the unfairness to some ratepayers who may have to pay the general water charge because they are connected to a service drain, a highways drain, and also have to pay the cesspool charge because they will have their cesspools emptied. We have agreed that in many cases the cesspool charge will be higher than they faced in the past. As I read the Bill, there will be some who will have to pay both ways.
Finally, I have a question to ask. Will the definition of those without sewerage in this clause be the same as that under Clause 2, or will it be possible under Clause 2 for water authorities to go for a different definition for ratepayers without sewerage facilities? In other words, will the situation in future be different from that which we are imposing under Clause 1 for the refund?

Mr. Farr: It seems to me that this subsection (7)(a)(ii) is intended to enact that premises for which refunds are to be made must not only be such that they do not have a drain or sewer directly or indirectly communicating with a public sewer—either foul or surface water or both—but also that the occupier must not have the use, in respect of those premises, either directly or indirectly, of such a public sewer.
As we have heard from some of my hon. Friends, and from the hon. Member for Leicester, South (Mr. Marshall), complex issues can arise in the case of surface water drainage. To assist me in decyphering these complexities I am lucky enough to have the benefit of a number of illustrations which, unfortunately, I cannot arrange to have circulated in the Official Report.
There are two examples of not drained. These are all examples under subsection (7)(a). There is one example of a property which is drained, but not by a sewer or drain. There is one example of a property which is drained by a sewer or drain. There are no fewer than four examples of properties which are drained by sewer or drain communicating. In addition, there is an illustration of those examples where the occupier has the use of facilities which drain to a sewer or drain communicating.
One can see that these are matters of great complexity, and the Committee would do well to consider exactly what it wishes to do. Certain regional water authorities are disturbed about the complexity of the situation and they have a suggestion to put forward to clarify it and make it easier to understand and operate the system.
It has been explained to me that there are places where roof and surface water drains from premises via a fall-pipe across a pavement—not through any denned gutter or channel—into the kerbside gutter and thence ultimately to a public sewer. There are also cases of lock-up garages from which the roof water, and perhaps also the tenants' car wash water, flows across the forecourt and into a gulley. That is a separate type of illustration, and in these cases it is felt that the occupiers of these premises are benefiting from the enjoyment of the water authorities sewerage services and should, in equity, pay for them.

Mr. Jim Marshall: Mr. Jim Marshall rose——

Mr. Farr: I ask the hon. Gentleman to interrupt me later on, because it will be difficult for me to explain the case if I am interrupted in mid flow.

Mr. Graham Page: My hon. Friend will be down the drain.

Mr. Farr: The occupiers of these premises are clearly enjoying the benefit of the water authorities' sewerage services and should pay for them. Only those not enjoying such benefits should be entitled to a refund. The case of these latter can quite adequately be described by saying, in the language of sub-paragraph (ii), as one where
the occupier of the hereditament does not have the use, in respect of the hereditament, of facilities which drain to a sewer or drain so communicating".


that is, communicating with a public sewer.
However, it is felt that the use of the phrase in sub-paragraph (ii) "facilities which drain to" might be construed as denoting something more specific than the casual type of drainage arrangements to which I have referred. To avoid this danger, the phrase, in my view and in the view of some of the regional water authorities, should be omitted, and the question of how the premises are drained and the consequential entitlement of the occupier to a refund would then be one of fact rather than one of construing the esoteric meaning of the word "facilities".
It is to be noted by the Committee that this subsection and subsection (8) deal only with refunds, and thus the whole question of how water authorities are to determine questions of charges for sewerage and sewage disposal in the future is left undetermined, as the specific definition of unsewered hereditaments, and the specified provisions made for dealing with hereditaments subject to special rating—basically gas, electricity, and other undertakings of that nature—are confined to refunds.
7.0 p.m.
I urge the Minister, who has been patient in listening to my explanation, to take the opportunity to remove doubts about the future and to avoid another Daymond situation by specifically empowering water authorities to adopt this definition for the purpose of future charges. It is felt that the Bill, by confining the definition to the refund situation, implies that it cannot or will not, or will not necessarily, apply to future charges, and is virtually asking someone to take an authority before the courts for a further interpretation of the vague and indeterminate provisions of Section 30 of the Water Act 1973.
I believe that the points I have raised have substance, and I hope that the Minister will deal with them.

Mr. Crouch: On a previous occasion, Sir Myer, I asked whether you were bored. I am sure that you are not bored with this debate.
I do not believe that I have ever heard a better sewer speech than that made by the hon. Member for Leicester, South

(Mr. Marshall). I have been all fouled up in the past half hour, but the right hon. Gentleman has greatly helped me with these difficult clauses and his explanation of the mysticism surrounding types of drains and sewers, and types of facilities.
My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) was concerned to know what a sewer was, and sought a definition. I am equally concerned to discover the meaning of "facilities". Subsection (7)(a)(ii) speaks of
facilities which drain to a sewer or drain so communicating".

Mr. Jim Marshall: I ask the hon. Gentleman to picture a group of lock-up shops which have communal instead of individual toilet facilities. I understand the essence of subsection (7)(a)(ii) to be to ensure that the people concerned pay sewerage charges. If the hon. Gentleman considers that, he will see that there is some sense behind the subsection—more sense than in the inclusion of "surface water" in subsection (7)(a)(i).

Mr. Crouch: The hon. Gentleman has again made the matter clear for me. The point of subsection (7)(a) is to be found in sub-paragraph (i), the wrapping together of all types of sewerage whether dealing with
foul water or surface water or both".
I can only assume that the Department has advised the Government that it must be so, because there are still places where it is necessary to provide for all these eventualities. Some years ago, before a new main sewerage system was installed, I was surprised to find that in my constituency we were on a single sewerage system coping with storm water, surface water and foul water. When we had a storm we had a flowback through the normal house system. That was put right. I am not saying that it happens now in my constituency, but the Department may know that it happens in other parts of the country. I think that the Department has included the provision to cover all eventualities, but the fact is that local authorities are very confused by it.
In a letter dated 10th February, the treasurer of the Canterbury City Council told me:
The main point of concern arises in the definition in Clause 1(7)(a)(i) in that a property is to be deemed without sewerage if


it is not drained by a sewer or drain connecting directly or indirectly with a public sewer provided for surface water. The inclusion of surface water as well as foul water sewerage would appear to present such practical difficulties as to render identification in many cases virtually impossible, as it may become necessary to trace each individual sewer or drain to its ultimate reception point. Disputes in such matters would seem to be likely to lead to further litigation with far-reaching consequences.
I raise that matter because it is important that we should tell Ministers of the problems faced by another tier of government—an important tier of local government—as a result of what we decide, and it is at this stage that we must do so. I believe that Amendments Nos. 26 and 27 would help to improve the clause and remove some of the difficulties that would otherwise occur.

Mr. Speed: The Committee is indebted to the hon. Member for Leicester, South (Mr. Marshall), my hon. Friend the Member for Harborough (Mr. Farr), and all hon. Members who have spoken, for trying to weave a way through the matters covered by the subsection. I shall not repeat all the arguments, because other hon. Members have made the case admirably.
There is considerable concern among local authorities about the point that my hon. Friend the Member for Canterbury (Mr. Crouch) has just raised. My hon. Friend mentioned his city treasurer. Only two days ago the Association of District Councils sent me a letter pointing out the differences between the definition in the Water Authorities (Collection of Charges) Order 1975 and the definition in the Bill. The Association, which will have to deal with many of the problems, says:
The Bill changes the latter part of that sentence to 'foul water, or surface water or both'. Under the latter definition, it is simply not true to say that 'local authorities know where most of them are at present'. The attached paper"—
hon. Members will have received copies—
gives ten possible variations (and these are not exhaustive)… It was produced by a district treasurer who tells me that although he and his colleagues have information on unconnected properties, under the old definition, the extended one will…give rise to grave difficulties and arguments with ratepayers.
That is the burden of the argument today.
I very much agree with those hon. Members who have said that whatever marginal advantages there may be in changing the definition, they are more than outweighed by the advantages to local authorities in carrying the definition in the 1975 Order into the Bill.
There is an additional problem. If we are to create new difficulties in terms of knowing where the properties are, how will local authorities, and particularly water authorities, trace them? I understand that they do not have powers of entry under the Bill. The only powers of entry are those in connection with metering in earlier legislation. Amendments Nos. 27 and 28 try to meet this point and put the Bill on all fours with the 1975 Order.
Both my hon. Friend the Member for Harborough and my hon. Friend the Member for Canterbury mentioned the question of facilities, covered in Amendment No. 31. The hon. Member for Leicester, South gave his interpretation of the way in which facilities could be useful, but I am not sure that it is entirely right. I am not criticising the example he gave, but I think that it would still hold up if we deleted the words "facilities which drain to" by Amendment No. 31.
I can see again that people who like litigation may have a field-day, since this wording could be construed as some-think that it clearly is not. I am not clear what the word "facilities" adds to the subsection. I cannot see that its removal would weaken the clause. On the contrary, it might make it more litigation-proof, and that, surely, is our objective. I am sure that my hon. Friend the Member for Harwich (Mr. Ridsdale) will go along with the basic spirit of what we are trying to do in Amendment No. 31. I ask the Minister to consider all these amendments, since hon. Members have made a formidable case.

Mr. Denis Howell: The only person in the Committee who is not looking forward to my answer is myself, following a debate of such complexity, which has raised so many vitally important issues. Hon. Members have raised them in a very constructive way. I undertake to have everything that has been said, together with the illustrations given, looked at again.
I very much agree with the hon. Member for Bury St. Edmunds (Mr. Griffiths) and the hon. Member for Harborough (Mr. Farr) that we must get it right this time, that our definitions must be foolproof. That is why the wording in the Bill differs from the wording of the Order. We are trying to get the thing right and therefore we have found it necessary to have a difference in language.
I agree about many of the difficulties raised by my hon. Friend the Member for Leicester, South (Mr. Marshall). If every local authority as a result of the Bill were called upon to rush around its area and find out the properties where only surface water was involved, it would be an impossible position. I hope that I can reassure the Committee that that is not the case, however. We are dealing in this clause with refunds, and if people want a refund they will have to claim it if they come under the provision dealing with surface water.
Therefore, the test specified will be applied. As has been rightly pointed out, the work was done last year. The hon. hon. Member for Norfolk, South (Mr. MacGregor) has got it right. The local authorities were called upon, as a result of the 50 per cent. relief we gave last year, to identify the bulk of the properties which would be involved. It is not the properties which have already been identified that we are concerned about but the other properties where the question is whether they should be examined for surface water. If the people concerned in those want a refund, they will have to claim it, and at that point the test will be applied by the local authority. The test we are seeking to rely on in the drafting of the Bill is simple.

Mr. MacGregor: A letter I received from the Department of the Environment said:
Some properties which qualified for a 50 per cent. remission last year will not be eligible for refunds.
So there are some properties which the local authorities have identified about which we are not worried as the right hon. Gentleman says that they will not get the refund.

7.15 p.m.

Mr. Howell: I cannot deny a letter from my own Department. I think that the hon. Gentleman is right, but I will look into the point. I understand that if there is a difficulty in the basis of a claim, that claim will have to be investigated against the test we are trying to create in this clause. What is the test? There are difficulties about what is a drain or a sewer or a gully, where certain water goes to and where other water goes to. But the test is simple. Does the water find its way into the possession of the regional water authority? In other words, is the authority at the end of these drains or sewers or gullies called upon to provide a service in respect of that water?
It may be that we have not got the test right, but I cannot think that one could possibly apply another test. Once one started differentiating between gullies and drains and so on, one would come up against such problems as what happened to water which went into water butts, for example, which was subsequently used to clean a car. We should have to answer such questions as to where it goes to, whether it has detergent in it, and if it has, whether the regional water authority has to deal with it. It would be an impossible situation. The simple test is to decide where the water goes—does it get into the possession of the water authority? If so, there should be a charge because it has to deal with it and treat it.

Mr. Jim Marshall: Mr. Jim Marshallrose——

Mr. Hal Miller: Mr. Hal Millerrose——

Mr. Howell: I am not quite sure who are my hon. Friends tonight, but I will give way first to my hon. Friend the Member for Leicester, South.

Mr. Jim Marshall: I assure my right hon. Friend that I am one of his hon. Friends. I realise from what he is saying that one could carry this to ridiculous extremes, but we must not forget that lawyers get paid to try to run a coach and horses through legislation, and I think that the gist of the points made in the debate is that the wording in the Bill at present will enable lawyers to do that very thing.
My right hon. Friend says that the test is whether the water finds itself in the hands, so to speak, of the regional water authority. I would have thought, on that basis, that all water finds its way into the possession of a regional water authority in a stream in the cases mentioned by my right hon. Friend. Are the water authorities responsible for streams and rivers? What about the case that even where water goes into private sewerage works it is discharged into a sewer, a recognised stream. Presumably, therefore, it ends up in the hands of the water authority.

Mr. Hal Miller: I thought I heard the right hon. Gentleman say that people would be expected to claim for their refunds. I find no mention of that in the Bill, nor in any of the amendments so far. Presumably it is necessary to make some provision as to how much claims should be made, within what time, and so on. What the right hon. Gentleman has said seems to introduce a new concept.

Mr. Howell: I hope that that is not the case. Most people affected will not have to claim because they will automatically get their credits under the system we have agreed. But in so far as there has been a change of wording between the Order and the Bill, if people have not got their credits they will presumably claim, and it is at that point that the claim will be investigated. I only made the point to assure the Committee that our change of wording will not impose a massive additional burden on the local authorities. I was trying to give some comfort.
I come now to an aspect which is not at all humorous. As the House knows, I am advised that the cost of this matter to the industry is £60 million, and that if we eliminated the surface water claims the figure of £60 million would pale into insignificance compared with what the cost would then be.
Not only garages would be eliminated. Places such as ICI at Billingham and other very large parts of private industry would also be exempt. We have not had time to calculate the cost, but it would be astronomic and would have to be borne by domestic water

users. I am sure no one in the House wishes to impose a further burden on them.
Amendment No. 25 seeks to leave out the words "or directly", but the phrasing of this part of the clause is designed to catch properties which drain directly into a private sewer which then goes into a local authority sewer. It is clearly right that a charge should be made here because a cost is incurred by the local authority. If we accepted the amendment, everyone else would have to pay more.

Mr. Keith Stainton: I accept the right hon. Gentleman's explanation and find it quite reasonable but the phrase "or indirectly" is open to other interpretations than the one with which he has dealt. They were expounded at some length by hon. Members and the Minister has not dealt with the looseness referred to by hon. Members.

Mr. Howell: I have told the House what we intended to cover. I will look again at the specific points made by hon. Members and if I am advised that there is any dubiety in this matter, we shall seek to put it right.
Amendment No. 31 seeks to leave out "facilities which drain to". This definition is designed to catch, for example, caravans with a central block of washing facilities and shops in precincts. The Migael case was referred to on Second Reading. A man had a lock-up shop in a precincts and, although his shop did not have water and sewerage facilities, the precinct as a whole did. He considered he should be exempt from charges, but the court held, rightly in my opinion, that, as the precinct was provided with a water supply and a drainage system, the man was getting some benefit from them and should therefore make a contribution.
The same argument applies to a caravan site where although individual caravans may not have a water supply or drainage, these are available to the site. In all equity, some contribution should be made in these cases. That is the reason for the phrase facilities which drain to".

Mr. Crouch: I am a little confused by what the Minister has been saying in the past five minutes. If a house has a cesspool for its foul sewage and has, for


example, a facility for carrying storm water from the roof, down a drainpipe into a soakaway which falls into an open drain and then into a proper drain, is that house deemed to be connected to the main sewerage system? If so, it is an appalling definition.

Mr. Howell: I ask the hon. Member to think again. I do not think it is appalling. If that water has to be dealt with by a regional water authority, there should be some charge. Unfortunately, when the water goes to an authority in this way, it is not possible to distinguish it. Surface water becomes mixed up with more direct foul waste.
It is right that this test should be applied. I have conceded that it will create complications, but we cannot think of a better definition. With respect to the hon. Members who have spoken very lucidly and drawn attention to anomalies and difficulties, none of them has come up with a better definition.
I cannot accept the amendments, mainly because of the astronomic increase in costs they would involve. We have looked at this matter very carefully and I have taken the best advice available. I said earlier that the £60 million could pale into insignificance and I would not be surprised if it were doubled by eliminating these properties, mainly large industries, from charges. No one would want to impose such an additional burden on domestic water users.
I hope hon. Members will think about what I have said. If they still believe that I have not got it right and wish to come to see me before the Bill goes to another place, I will gladly look at the problems again. We shall look at all the points that have been made in this interesting and complicated debate. If we have missed a point of substance, I shall seek to put it right. I am anxious to get a degree of equity and a scheme which is reasonable to understand, defend and apply. That has been our aim and I hope that hon. Members will withdraw the amendment.

Mr. Speed: The House is concerned that this Bill is as legally watertight—I am sorry to have to use that phrase—as possible. We do not want more legislation. I accept the Minister's point about the increased costs. Would it be possible for us to get round that difficulty by con-

fining the surface water aspect to directly connected properties rather than to directly and indirectly connected properties? This might meet the point from all sides.
There are clearly differences between the advice the Minister is getting and the advice hon. Members have received from local authorities. Before the Bill goes to another place, there should be consultations between the Minister's officials and the Association of District Councils and other local authority associations. Up to two days ago, they were very concerned about what the Minister was doing and were not satisfied with the explanations they had received.
Perhaps the Minister might also consider the problem of verification of claims. I understand that there are no rights of entry in this Bill or any other legislation. This is a problem to which he may wish to refer again.

Mr. Eldon Griffiths: I am anxious not to prolong the debate, but the Minister used an interesting phrase when he referred to making the Bill foolproof. I want to make it lawyer-proof. There may be some similarity in the aims. I am more worried about lawyers than about fools.
I have a number of questions which I hope he will take up with his officials and seek further advice. He referred to the test being applied by the Government on whether water had to be dealt with by regional water authorities, but I beg him to think most carefully before making that the whole criterion. I think he will find that all, or nearly all, water ends up in the drainage systems of this country. Some goes by way of aquifers at some depth. Some will sink into the ground in the territory of the regional water authority but, in spite of our care in drawing the boundaries, some may end up in the territory of another regional water authority. To make the Bill proof against the lawyers, I ask the Minister not to make that the exclusive test, because it can be more complex.
7.30 p.m.
Will there be some wretched people who end up by paying twice? According to the letter read out by my hon. Friend the Member for Norfolk, South (Mr. MacGregor), some people will have to pay the new, and sometimes fairly


high, pumping costs for the tankers but will not be let off the charges from which the Bill seeks to relieve most people who have been caught. There will be a frightful row if some people are caught with two charges. I hope that the Minister will have consultations on this and will find a way of advising the House at an early stage how many people are likely to be in that situation.
The Minister expressed the surprising view—which of course I accept—that the cost would rise astronomically if the term "all surface water" were struck out. If he is right, it implies that before the matter arose, the ICIs of this world were not paying anything, that they were charged under the 1973 Act and, under the judge's ruling, are now to be let off. I find it hard to believe that at some stage the ICIs were not paying anything. My impression is that most companies, including the public sector companies, were paying a great deal. Is the Minister's argument well-founded?

Mr. Crouch: Speaking from my industrial experience, I know that an industrial company pays a high precept for using the sewerage system for large quantities for effluents.

Mr. Griffiths: I agree with my hon. Friend.
The Minister knows that there are certain parts of the country—some in my constituency—called the Fens. There, surface water is a question of the time of year. There are times when the surface water is running into the houses so that one cannot have a run-off. There are some properties in the Fens which will be relieved by the Bill. If the definition remains, they will be eligible for relief during the relatively dry parts of the year when water surface levels are low, but during the rest of the year when the Fens rise they are in the opposite position and will presumably fail to obtain relief. That is a minor technical point, but on the grounds that we want to make the Bill lawyer-proof, not foolproof, let us get these aspects right.

Mr. Hal Miller: I understood the Minister to say that if the 1975 Order definition were adopted, large firms like ICI would be outside the scope and the result would be a considerable addition

to the burden. I find that hard to believe. I am not trying to tie down the Minister to an exact form of words, but I cannot believe that the position is as it has been understood by some hon. Members. I ask the Minister to re-examine this matter. It is another aspect of the indecent haste with which the Bill is being processed. The queries that have arisen tonight show that we have not had enough time to grapple with the problems.

Mr. MacGregor: It seems from the Minister's reply that, for reasons of cost, we are not wholly following the House of Lords decision based on the definition in the 1975 Order. We are all worried that some people will have to pay twice in the coming year both for the refund and the cesspool charges. Will the Minister consider introducing a further qualification by removing domestic ratepayers from the surface water definition? That would avoid the difficulty of people who cannot afford it having to pay twice, and it would be of advantage to local authorities in that these groups are difficult to trace.

Mr. Denis Howell: I am obliged to the hon. Gentlemen who have raised interesting points. To deal with the last one first, I assure the Committee that the Bill does nothing that is contrary to the principle laid down by the House of Lords, which was that we should charge only the people who had a service. Part of our case in respect of surface water is that a service is being performed and therefore it is reasonable that the people for whom the service is being performed should be charged.
I am told that there is some substance in what the hon. Member for Bury St. Edmunds (Mr. Griffiths) said. It is conceivable that some people might pay twice. We shall do our best to avoid that, and to put it right if it occurs. When water authorities move to direct billing no one can be charged twice, but that is another matter. We have not gone too far down that road, because we are doing what the hon. Gentleman wants us to do and consulting the local authority associations. There is a difference of view. Some local authority associations wanted to go to direct billing until they found that what they were being paid by the water authorities for the administrative


convenience of collecting the money was worth something to their ratepayers, so they are now becoming rather hesitant.
Reference was made to the great increase in charges made by local authorities for emptying septic tanks, and so on. That question will be dealt with later when we consider the first amendment on Clause 2. That is a local authority matter for which regional water authorities cannot be held responsible. It is a matter about which the hon. Member for Ashford (Mr. Speed) and I have talked. We realise that, although water authorities have one set of responsibilities and local authorities another and in law each is completely separate, in equity and practice one cannot be entirely divorced from the other. When we come to deal with that I shall be anxious to get the view of the Committee on what can or cannot be done at another stage. It is a complicated matter.
I assure the hon. Member for Bromsgrove and Redditch (Mr. Miller) that I am right about the sums. I have had the matter looked at three times this week.
I know that hon. Gentlemen are raising some points which occur to them and some which have been drawn to their attention. I want them to consider what I have said in relation to the advice which they have been given and to discuss it with the people who are advising them. If, as a result of that process, they would like to take up with me any questions I shall be pleased to do so. If they convince me that I do not have it right. I assure them that I shall seek to put it right.
However, we have had a very interesting discussion on an extremely involved and technical matter. I hope that we might now be able to make some progress. I hope that these amendments will be withdrawn in the light of my assurances and undertakings and in the knowledge that we can return to them if it proves necessary.

Mr. Ridsdale: I hope that the Minister at all stages will see that the domestic ratepayer is treated fairly. In view of what he has said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 29, in page 2, line 30, leave out 'occupier' and insert:
'person liable to be rated in respect'.

No. 30, in page 2, line 31, leave out 'in respect' and insert 'for the benefit'.—[Mr. Denis Howell.]

Mr. Newton: I beg to move Amendment No. 32, in page 2, line 33, leave out paragraph (b).

The First Deputy Chairman of Ways and Means (Sir Myer Galpern): With this we may take Government Amendment No. 33 and Amendment No. 34, in page 2, line 43, leave out paragraph (ccb).

Mr. Newton: The purpose of the amendment is partly to probe the question, but in so far as I understand its purport it is also to ensure that there is no possibility of arbitrary and excessively favourable treatment being given to the nationalised industries, which form a very important part of this calculation.
Some reference has already been made to the financial size of the sums that are going to nationalised industries. One major water authority informs me that it estimates that about 60 per cent. of its refunds will be going to nationalised industries. I have also obtained some information from the Anglian Water Authority, which covers my area, to the effect that nearly £2 million of its refunds, out of a total of nearly £11 million, will be going to the nationalised industries. That is obviously a good deal less than 60 per cent., but it is still a very sizeable sum of money.
Amendment No. 32, and Amendment No. 34, which is consequential upon it, would leave out paragraph (b) of subsection (7). I want to comment on the reason why I have tabled the amendment in this form. If one looks at subsection (7) and translates it out of legal jargon into plain English, one finds that what it actually says is that for purposes of this refund a hereditament is without sewerage if (a) it does not actually have any sewerage, or (b) the Minister defines it as not having any sewerage. That seems to me to be a very odd situation indeed in relation to the question whether a hereditament has sewerage. Even though, perhaps, a difficult matter of fact, in the


light of our previous discussion, it is none the less a matter of fact.
I cannot understand why we need subsection (7)(b), which gives the Minister these very wide powers. In my mystification I have traced through, in a rather hasty fashion—which is all that we have time for in these circumstances—the powers of the Minister under Section 254 of the Local Government Act 1972 and the various other powers that are referred to in the Bill. Essentially they appear to give the Minister power to do more or less anything that he decides he wants to do, and they do not help one very much in deciding what he is likely to do under this special discretion.
What is clear, though, is that this paragraph applies especially to the limiting amendments that the Minister himself has tabled, and only to four possible types of undertaking—namely, the statutory water undertakings, the gas boards, the electricity boards, and the railway and canal undertakings. I think I am right in saying that it may include the mines as well. Perhaps one of my hon. Friends will correct me if I am wrong. Essentially, however, this paragraph refers only to the nationalised industries, and it appears to give the Minister power to define them as not having sewerage, whether or not they have sewerage. At any rate, that is as much sense as I can make of it.
I hope that this amendment will give the Minister an opportunity to tell us precisely what this paragraph is intended to mean, to assure us that there will not be unduly favourable treatment for the nationalised industries in view of the burden, in any event, falling on other ratepayers, and to indicate precisely how he intends to use these powers. Unless I can get more satisfaction from the Minister than from reading the Bill and attendant legislation, I can see no purpose in this provision, which I regard as rather undesirable.

7.45 p.m.

Mr. Alec Jones: The objective of the amendments would seem to be to deny what the hon. Member for Braintree (Mr. Newton) seems to think is special treatment being meted out to the formula rated nationalised industries. I should indicate now that we are not talking of five. The four that the hon. Gentleman

mentioned—the Post Office, the electricity boards, the gas boards and the water authorities—are the only four that need this special treatment—if I may use that phrase. I shall explain the reason for that shortly.
First, we are certainly not giving these industries any special favours or preferential treatment. It is simply a fact that where these four industries pay rates and water and sewerage charges, against a total rateable value—I understand that the jargon in rating circles refers to that as a "cumulo"—there is no way of knowing how much of the charge relates to unconnected property and how much to sewered property. I suppose that it is true that whether it is unconnected or connected is a fact, but there is no way of knowing that fact.
What we intend to do, therefore, and what these wide powers—as the hon. Gentleman described them—seek to do, is to give these four industries a percentage refund. It cannot be exact. By its very nature there must be an element of rough justice in it.
There is certainly no intention whatsoever of giving a refund of nearly 100 per cent. I assure the hon. Gentleman of that. These properties are not easily assessable. Some have underground pipes, and pylons, and so on. It is therefore a complicated process to find the facts—as the hon. Gentleman said. What we are now doing is discussing with the industries what sort of percentage the refund ought to be to provide a measure of justice, even though it be somewhat rough justice. The amount of refund will be laid down in the Statutory Instrument, so the hon. Gentleman will see the figures after the discussions have taken place.
It is not a question of giving preferential treatment; it is a matter of trying to deal with the very practical problem of not being able to assess with any degree of certainty in this matter. In fact, I am advised that the effect of the hon. Gentleman's amendments would be to make these industries liable to the same test of connection as other properties—that seems fair on the face of it—but quite possibly it would be to give them more refunds than they are likely to get under the special arrangements.
I hope that that assurance and explanation justifies the point I make—that it


is not a question of the Secretary of State or anyone else exercising wide powers; it is a question of exercising the powers which are necessary because of the special circumstances which prevail in these four industries.
Amendment 33 is purely a drafting amendment. It seeks to bring the wording of this subsection in line with subsection (1)(a).

Mr. Speed: We are grateful to the Minister for his explanation. Under the "cumulo" arrangements it certainly seems that one has to have paragraph (b) in the Bill. I take it that it would be under sub-paragraph (ccd) in paragraph 14 of Schedule 7 of the Local Government Act 1974 that the statutory instrument would be made.
There is one matter that slightly disturbs me. My hon. Friend the Member for Braintree (Mr. Newton) gave some fairly substantial figures concerning the Anglian Water Authority. From other water authorities one has heard figures such as 60 per cent. I understood the Minister to say that discussions are still taking place with the industry and that nothing is yet determined. It might be helpful if, when the Bill is enacted, we could have some indication of when we shall be seeing the Statutory Instrument and when the House will be able to form a view.
Presumably it is on the basis of discussions that are now taking place that the estimates referred to by my hon. Friend the Member for Braintree, which have been advanced earlier today, have been arrived at. There is a problem here. In trying to look ahead, it would be better if we could put this type of industry upon a more logical charging basis and put it on all fours with private industry. I am not saying that in any sense antinationalisation. I am thinking of the regional water authorities. Water and sewage are vital and fundamental to industry. It is therefore unfortunate that we cannot get away from this "cumulo" basis. I understand the reasons. We are dealing with pylons, railway works, and so on, for which it is difficult to get a specific rateable value.
If the Minister assures us that under the provisions of paragraph (b) this is the only effective way of dealing with the

problem, that we shall have a chance to look at the Order which clearly must come under the appropriate Act in sub-paragraph (ccd), and that there is no question of nationalised or other industries being treated more fairly or generously than the domestic ratepayer—whether the domestic ratepayer is connected or unconnected—we should not necessarily wish to press the amendment.

Mr. Graham Page: I should like to refer to Amendment No. 33, which gives power to specify these undertakings by an Order under Section 254 of the Local Government Act 1972. That is a wide power, to state not only what undertakings but what areas of those undertakings shall receive refunds by being treated as premises without sewage for the purpose of that section. That is a form of Order by Statutory Instrument, subject to the annulment procedure in this House. I am sure that the Minister has heard me say on more occasions than he wishes to remember that the annulment procedure in this House has almost gone by the board. The Secretary of State will be giving away someone else's money, because he is giving back refunds, for which the general ratepayer will be paying, by an Order which is unlikely to come before this House.

Mr. Stainton: I am sorry to interrupt this interesting theme. Is it clear to my right hon. Friend that under the Bill as it stands these Orders do not already exist?

Mr. Graham Page: I am not sure to what my hon. Friend refers. It is the Minister is aware of the way in which these Orders are to be made and what will be contained in them, I hope that he will let hon. Members know. No doubt there are consultation documents going round the industries concerned. As usual, those outside the House probably know more of the Government's intentions than do hon. Members. If consultation documents are going round, I hope that they will be placed in the Library for us to read.
My point is that this type of Order deals with money and that the House will be rubber-stamping it because it will not be able to debate it. Such an Order will enable the Secretary of State to give away ratepayers' money by way of refunds to


certain undertakings based on properties belonging to them.
I hope that the matter will be dealt with by way of affirmative Order. When the Secretary of State makes these Orders he should bring them before us in draft so that we may consider them, whether on the Floor of the House or by the convenient method of Standing Committee upstairs. I believe that we should use the affirmative, not the negative, procedure when dealing with someone else's money in this way.

Mr. Newton: I take it from the way in which the Minister put this matter that he accepts it is unsatisfactory for an arbitrary calculation to be made regarding the refund to which the industries covered by this proposal are entitled. We are thrown back on the good will and genuineness of the hon. Gentleman's assurances, which I do not doubt, but which it will be difficult for anybody to be sure have been fulfilled or not.
One point puzzles me. I understand that difficult calculations have to be gone through to decide how much is to be refunded. How was the charge assessed in the first place? How was the total which the nationalised industries have been paying determined? By definition, we are asked to believe that the sum involved included an element for sewerage. However, we are now told that a calculation has to be made to discover what that element is. I do not understand the basis on which the rating has been taking place. I hope that the Minister has something more convincing to say in reply to that point.
I suggest that the easiest way would be to ignore this complex, rather abstract concept for the purpose of the refunds and simply leave the nationalised industries out. That would reduce the burden on other ratepayers and leave us with an easier problem.
In any case, I should like to know how the rates which they have already paid were calculated. Nobody appears to know.

Mr. Alec Jones: Subsection (7) makes special provision for a hereditament subject to special rating under Sections 26 to 36 of the General Rate Act 1967. Therefore, the question of rating is

covered. We are seeking to establish, where these four industries are entitled to refunds, how best to assess the percentage of refund they should get. It seems reasonable to use Section 254 of the Local Government Act 1972 for each of these industries and to make the appropriate order.
We do not know how much of the rateable value of these four industries related to their unconnected properties. They pay their charges as a rate poundage on the total rateable value. The assessment of rates is easy. We are trying to work out how much of the refund they are entitled to received for properties which are unconnected. That is the difficulty. If we were in an ideal situation we would try to find something else. Unfortunately, we are not in that situation. For example, to visit each installation owned by the electricity industry would make the task almost a non-starter.
I agree with the hon. Member for Ashford (Mr. Speed) that the statutory instrument to which he referred would come under paragraph (ccd).
I take the point always made by the right hon. Member for Crosby (Mr. Page) about preferring the affirmative procedure. When I sat on the Opposition Benches, I probably said much the same thing. Even now I am not sure why we do not use the affirmative procedure more. It seems fairer.
The hon. Member for Ashford asked about the percentage of refunds on figures which have been mentioned in the debate. We are still in the process of discussing the matter with the industries concerned. There can be no final figure. I cannot help the hon. Gentleman any further because we are not in a position to give any worthwhile assessment of where these discusions will lead. However, they are taking place and as soon as possible we shall make this information known.
We cannot make the Order until the Bill is passed. Affirmative procedure would not leave time before the start of the financial year—which is one of our problems—because most of the Order is technical. We hope to announce the percentage of the refund in time for consideration in the debate in another place. I hope that I have answered the specific points raised by hon. Gentlemen.

8.0 p.m.

The First Deputy Chairman: Does the hon. Member for Braintree (Mr. Newton) wish to comment?

Mr. Newton: Thank you, Sir Myer. Were any 50 per cent, remissions made to these industries last year? If so, how were they calculated?

The First Deputy Chairman: Order. The hon. Gentleman has misinterpreted my invitation. I thought that he was about to act in a gentlemanly fashion and withdraw his amendment.

Mr. Newton: I apologise, Sir Myer. I had forgotten that it was my amendment. I shall seek leave to withdraw it shortly. I should be grateful if the Minister could answer my question.

Mr. Alec Jones: There was no 50 per cent. remission to nationalised industries.

Mr. Newton: I cannot digest the implications of that at the moment. I shall not pursue it further. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 33, in
page 2, line 33, leave out from 'and' to end of line 35 and insert 'is of a description specified for the purposes of this section by an order under section 254 of the Local Government Act 1972A—[Mr. Denis Howell.]

Question proposed, That the clause, as amended, stand part of the Bill.

Mr. Stainton: We have now dealt with 11 Government amendments. That is astounding. I am not being critical, but this underlines the extraordinary complexity of the situation. The House is well advised to be on its guard.
I re-emphasise that I am disturbed about Clause 1(7)(a)(i), on which there have been a number of exchanges. The Minister has expressed his sensitivity to the comments of those hon. Members who spoke on this clause. These are matters of concern which I am sure my right hon. Friend the Member for Crosby (Mr. Page) intends to pursue relentlessly between now and when the Bill is discussed in another place.
I wish to ask the Minister one question. Perhaps the answer is straightforward, and it may be that I am too dim to realise its implications. Clause 1 begins by placing a duty on water authorities. It says:

On 1st April 1976 it shall become the duty of every water authority to refund".
We have established that duty on the part of every water authority. Layman that I am, I can find nothing in the clause that lays down how that duty is to be discharged. Although it may be a simple administrative matter that would flow automatically from the duty having been imposed, it is not a comprehensive or sensible way of drafting. In my view we have done only half the job by imposing the duty. We have not completed our task by describing how that duty will be discharged. I hope that the clause will have a reasonably fair wind.

Mr. Graham Page: Throughout the debate we have discussed administrative matters. Some points of substance against the Bill have been raised, but to a great extent administrative matters have had priority. It is possible that the Secretary of State wants a power to make Regulations, if necessary, to direct the way in which the clause should be administered. By reading into the Bill the 1973 Water Act there may be an indirect power to make Regulations by Statutory Instrument to right any administrative difficulties that may appear. It would be a reserve power, which I believe the Secretary of State would welcome, to smooth over the difficulties and give a certain amount of flexibility to the administration which would otherwise be so rigid under the clause.

Mr. Denis Howell: Possibly the reason why the hon. Member for Sudbury and Woodbridge (Mr. Stainton) felt that we have not given enough attention to the mechanics of how the duty would be carried out is that it arises in subsection (8). We have spent a lot of time on other subsections, but we have not spent much time on subsection (8).
The right hon. Member for Crosby (Mr. Page) raised the same point in more precise terms. The Bill imposes a duty and lays down the basic rules. The Order will provide the mechanics to discharge that duty. I hope that with that explanation the House will believe that we have got it right.

Question put and agreed to.

Clause 1, as amended, ordered to stand part of the Bill.

Clause 2

WATER AUTHORITIES' POWER TO CHARGE

Mr. Speed: I beg to move Amendment No. 37, in page 3, line 17, leave out from beginning to end of line 7 on page 4 and insert:
'from persons for whom they perform the services, provide the facilities or make the rights available:
Provided that in respect of the services, facilities and rights other than the supply of water the authority shall allow such persons a remission equal to one-half of the charges therefor'.

Mr. Newton: On a point of order, Mr. Deputy Speaker. Perhaps it would help if I indicated that I do not wish to move Amendments Nos. 43 and 48 and would be happy to have them taken with Amendment No. 37.

The First Deputy Chairman: The selection has been made by the Chairman of Ways and Means. Amendment No. 48 seems to relate to an entirely different clause.

Mr. Speed: I do not think it does, Sir Myer, but this is one of the difficulties that the House faces due to lack of time. I have no doubt that the amendment is defective. Also, I do not wish to pursue the figure in the amendment for reasons which I shall adduce. We tabled it fairly soon after Second Reading and we have had second, third and fourth thoughts since then.
Basically, taking into account the decision in the House of Lords, those who are not connected, according to the definition, will receive a remission, in practical terms, of about 97 per cent. of the general service charges. They will have to pay only for those charges listed in Clause 2(1)(a).
On Second Reading my hon. Friend the Member for Daventry (Mr. Jones) raised the question of highway drainage. He put forward a figure of 30 per cent. which in some parts of the country is probably accurate. We are now advised, having pursued the matter—we have had little time to do this—that that might be a high figure. In some parts of the country charges are levied upon the highway authority, whether it is the Department of the Environment or local

authorities. In other parts the drainage may go to streams which are not necessarily the responsibility of regional water authorities. In other parts it is quite clear that there is a charge which the regional water authority has to meet as a result of highway drainage.
It is difficult to put a precise figure on this, but the entire community gets the benefit of highway drainage, the charge for which falls in some degree upon the water industry. It is therefore reasonable that a percentage should be paid by everyone, whether connected or not.
As my hon. Friend asked on Second Reading, is it not fair that there should be some contribution, even if not major, towards the cost of sewerage and sewage disposal by all ratepayers? That is also the view of the Association of District Councils in its most recent letter to me. If that is so, it would clearly be totally against the spirit, as well as the letter, of the Lords' judgment to talk in terms of unconnected ratepayers paying 80 or 90 per cent. of the general service charge.
Speaking as an unconnected ratepayer myself, I believe that it would be reasonable to impose a charge of, say, 25 per cent. to cover the costs of highway drainage and any element of benefit from sewerage and sewage collection. That would have the desirable side effect of marginally reducing the burden on connected ratepayers, but we are not arguing just from that point of view. We are seeking equity and justice. Someone who is not connected receives considerably more than the 2 per cent, or 3 per cent, of the benefit of services covered by the Bill.
If the Committee accepts this basic conclusion which is totally in line with the Lords' judgment, the way to proceed might be to amend Government Amendment No. 38 so as to add:
for services liable to be rated in respect of hereditaments to which this sub-paragraph does not apply, 25 per cent. of such charges".
That is just an idea, but the Minister's amendment gives us the opportunity, perhaps in another place, to say that a rather greater charge should be imposed.
On the highways side and from the point of view of sewerage and sewage disposal, there should be some contribution. There is no doubt from Clause 2(1)(a) that these matters will grow in difficulty,


particularly as the Control of Pollution Act 1974 and other legislation get well under way.
The Minister has been helpful over this matter and I hope that he will be able to agree that this is a fairly important point of substance. As one who is not connected and thus stands to benefit from the Bill I believe that I should be getting an unfair advantage if I paid only the small percentage proposed.
We need to ensure that we avoid the double charging which has been mentioned. Some people who are not connected will be disadvantaged by the Bill, particularly when they have to have a number of collections from their cesspools or septic tanks in one year and will face much higher fees. But that does not alter the basic fact that they generally get a substantial benefit, which we believe to be about 25 per cent., rather than the 50 per cent. that we put in the amendment. I realise that the amendment is defective, and as it stands, I am not even arguing for it, but it will help the House to express a view which could be taken care of in another place.

8.15 p.m.

The First Deputy Chairman: Before I call the next speaker, I should like to deal with the point raised earlier by the hon. Member for Braintree (Mr. Newton). He sprang his suggestion on me and it would have been much more helpful if he had come to the Table earlier. I am sure that that was an oversight. Without advance notice, it appeared to me on a hurried look that Amendment No. 48 related to Clause 3. I have now found that, no doubt due to a printer's error, it does relate to Clause 2. So does Amendment No. 43. With the agreement of the Minister, I am prepared to allow the following amendments to be discussed with Amendment No. 37:

No. 43, in page 3, line 29, after 'are' insert:
'the drainage of highways and other public places, and'.

No. 48, in page 4, line 6, after second 'in', insert 'paragraphs (a) to (f) of'.

Mr. Denis Howell: Mr. Denis Howellindicated assent.

Mr. Newton: I am grateful to you, Sir Myer. I accept your gentle rebuke——

The First Deputy Chairman: It was not a rebuke—just a reminder.

Mr. Newton: I just thought that my suggestion would save time. I am grateful for what you have said. There was indeed an error. It is just that the point raised by my amendment is exactly the same as that raised by Amendment No. 37 and I am grateful for your ruling.

Mr. Hal Miller: As an unconnected ratepayer, I share the view of my hon. Friend the Member for Ashford (Mr. Speed) that a greater contribution than originally envisaged would be in order.
There are many people in my constituency who, because of the geology of their ground, have to have their cesspits emptied up to 48 times a year. The Severn-Trent Water Authority proposes a charge of £5·50 for treatment on top of the district council charge, which remains virtually the same, at £3·20. That is a total charge for emptying of £8·70 and there is some doubt about VAT on top of that.
The result of the House of Lords decision and the charges that it is proposed water authorities should levy is that these people will be considerably worse off. Because this problem affects a relatively less prosperous area in my constituency, some will be unable to pay these charges. They are in a real difficulty.
The Bill says:
…a water authority shall have power to fix such charges for the services performed…as they think fit".
The Severn-Trent authority proposes to levy its charge whether a load is full or not. It will not accept the principle of a part-load, which will make life much more difficult. The question has been raised of which Act the water authority is subject to. My constituents and my district council have tried to refer the matter to the Price Commission. I have written to the Minister on this matter. He has not yet been able to reply because of the complications of this debate, but this matter is causing a great deal of concern, apart from the level of charges. I should be grateful if he could point some way forward, otherwise, the last state of the people I have mentioned will be worse than the first.

Mr. Graham Page: Amendment No. 37 would bring magnificent simplification


to a very complicated Bill. It would solve many of the Minister's problems. It would present us with the concept which is well known to local authorities and to hon. Members—the concept of the general service charge and of the 50 per cent. remission. This is how it has been worked for the past two years, although the Law Lords said that it was illegal.
We must abide by the decision of the Law Lords and put the matter right for the two years during which the concept was in operation, but we are under no obligation to continue the complications which the decision of the Law Lords will involve. The amendment would solve the whole problem by allowing us to return to the concept of the general service charge and the remission of 50 per cent. as operated for the past two years.
I said on Second Reading that, although we have to put the matter right for the past, the Orders which were held to be wrong were merely carrying out what everybody thought that the Act allowed. Therefore, why should we not go back to that position? Let us make the Act do exactly what we thought it would do when we passed it through the House in 1973.
If the amendment were accepted, it would restore the remission of 50 per cent. of the general service charge to those unconnected. The general service charge is a charge for all the services other than the supply of water. The 1974 and 1975 Orders are intelligible and have been perfectly simple to operate. If we apply the decision of the Law Lords for the future as well as for the past, we shall get into all sorts of complications.
I hope that the Minister will think again. The amendment perhaps proposes a drastic change in the structure of the Bill, but, after all, that is what we are here to debate. I am sure that the Minister will have thought about this and I hope that he will continue to think about it. Although my hon. Friend the Member for Ashford (Mr. Speed) said that he does not propose to press the amendment but merely intends it as a means of enabling us to discuss this important point of principle, I am sure that the Minister will continue to try to

get this matter right in another place and bring it back to us later.
Further, I am not sure that the amendment is not good as it stands. I would have said that the Minister could accept the amendment straight off the cuff.

Mr. Denis Howell: The right hon. Gentleman drafted it himself.

Mr. Alec Jones: The right hon. Gentleman also drafted the original Act which caused all the trouble.

Mr. Page: The Minister of State rightly guesses that I drafted the amendment. I will let the comment of the Under-Secretary pass. I support the amendment.

Mr. Newton: I support my hon. Friend's amendment, in view of my own amendments, one referring to highway drainage which is probably impossible to identify in detail, which were designed to raise precisely the same point.
As I said earlier, I wholly accept that, in face of the Law Lords' decision, there can be no question of imposing any charge retrospectively. I agree wholeheartedly with what has been said in this respect on both sides during the debate. One of my great worries about the Bill has been, not just that we should now sort out the situation with which we are faced from the past, but that we should get it right for the future.
On Second Reading I said that it was unfair to my constituents who were unconnected—I include myself as an unconnected ratepayer—that last year and the year before that we should pay the whole charge but that it was fair that we should pay some of it. I do not know whether 50 per cent. is the right figure. I do not know whether 25 per cent. is the right figure. However, I suspect that the Bill still has not got it right and that there will be a new injustice as the Bill stands, in that large numbers of people will be making virtually no contribution, although they none the less enjoy some general benefit from the general drainage of the towns, the roads and other facilities that they use.
It is important to recognise that large numbers of people are involved. In a way, that is the obverse of the size of the refund. The Anglian Water Authority tells me that it has 240,000 unconnected ratepayers—that is, excluding garages,


which amount to another 150,000—out of just under 2 million ratepayers. Thus, we are talking about 12½ per cent. of properties which would then pay virtually nothing towards the general sewerage and drainage system.
I am told that in the Braintree District Council there are about 2,000 unconnected ratepayers out of 45,000. That is about 5 per cent. In the Chelmsford District Council there are about 5,000 unconnected properties out of just over 50,000—nearly 10 per cent.
I think that most of those people—certainly such of my constituents as I have spoken to—would accept that they enjoy some benefit from the general drainage of Braintree and Chelmsford and the roads between those two places and other places round about and that they should make some contribution towards it.
I do not pretend to know what the right figure is, but I do know that it would be wrong for the House to pass the Bill without taking more account of the general benefit of the drainage services than the Bill at present appears to take. I hope that the Minister will look at this problem between now and the Bill's proceedings in another place. Although I do not specifically support the terms of the amendment, I support the general case advanced by my hon. Friend the Member for Ashford.

Mr. Denis Howell: Once again I am grateful for the tone of the discussion, which I find very helpful. In a sense the amendment gets to the heart of the problem. I therefore welcome the discussion and I shall certainly look into all the matters that have been raised. I hope to contribute something to the thinking that I am anxious should emerge from the discussion.
The hon. Member for Ashford (Mr. Speed) will not be surprised to learn that the amendment, which was drafted by his right hon. Friend the Member for Crosby (Mr. Page), is defective. I cannot resist recalling what my hon. Friend the Undersecretary of State for Wales said: as the right hon. Gentleman drafted the 1973 Act which got us into all this difficulty, it is not surprising that his drafting of the amendment does not come up to the

high standard that we have come to expect from him.
The amendment is defective, first, because it would not give us any power to charge for community benefit services and, secondly, because it would restore the position in respect of the 50 per cent. remission to all properties, whereas the Government's scheme previously was to make a 50 per cent. charge for domestic properties. So there is a considerable difficulty there.
The point has been fairly made that people whose properties are not connected to the sewerage system should pay some charge. It is said that it would be wrong to relieve them of any general service charge. I have a great deal of sympathy with that point of view. Indeed, it was that sort of thinking which led the Government, a year ago, to decide that 50 per cent. would be the right charge to levy on households which, although not connected to the sewerage system directly, enjoyed a number of benefits from the general activities of the regional water authorities.
8.30 p.m.
What are the benefits? In deciding what is the right amount, if that is the road which we are going down, it is necessary to spell out the benefits. The Committee will appreciate how difficult it is to make a judgment. The amendment takes us back to the view that the Government's first thoughts last year were right—namely, that 50 per cent. was about right—whereas second thoughts now lead some to think that 25 per cent. would be about right. I am not quite sure whether the right hon. Member for Crosby agreed that 50 per cent. was right, or that it should have been between 25 per cent. and 50 per cent. Let us spell out not only to hon. Members but to the public the benefits which are enjoyed by those not directly connected to the sewerage system. I have much sympathy with the hon. Member for Norfolk, South (Mr. MacGregor), who has said that those who started this hare running did not realise where the hare would finish up, what it would consume on the way, and the difficulties that would arise.

Mr. Graham Page: Hare coursing!

Mr. Howell: I am not in favour of hare coursing. I believe we must spell


out one or two of the important facts so that citizens realise the benefits that they enjoy from the activities of regional water authorities. First, there are public health advantages. It is difficult to put a price upon them. Undoubtedly, if the regional water authorities were not dealing with the cleaning of our sewerage systems, the clearing of floodwaters and the cleaning of rivers, there would be considerable public health risks and hazards. It is difficult to put a price upon the authorities' activities in that sphere.

Mr. Stainton: I submit that the right hon. Gentleman is in danger of embarking upon a series of confused thoughts. He is trying to quantify public health in terms of the benefit that it confers on the community. I am sure that we are concerned basically with the costs that are incurred in providing public health facilities and not the value thereof, which is priceless.

Mr. Howell: I assure the hon. Gentleman that I am never confused in my thinking. I am the essence of clarity. I am seeking to demonstrate that if the authorities did not carry out their general duties the effect on public health would be enormous. That being the case, it is reasonable to expect people whose properties are not directly connected to the sewerage system to make a contribution towards the general public health advantages provided by the activities of the authorities. It is extremely difficult to quantify or to price those activities, but it is a factor that one has to take into account.
Even though the properties of domestic householders may not be connected directly to the sewerage system, the fact that there is treatment of sewage is a benefit even for those who live in unconnected properties. The owners of such properties presumably go on holiday, go into the cities and visit cinemas. Presumably they generally act within the community. If the services in question were not provided they would find themselves in considerable difficulty. Even though they do not use the services in their homes they use them outside in the course of their normal activities.
We must also take into account the control of pollution. The control of

pollution legislation which I brought forward, which received support from both sides of the House, is of great importance. I demonstrated its importance when I went to Europe to argue with our European partners whether we were doing enough to control pollution. I believe I convinced them that we were doing rather more than many other countries in Europe in that respect. The control of pollution legislation imposes new obligations upon regional water authorities. Some of those obligations have already come into effect. Others have not, because they require the introduction of an Order from my right hon. Friend the Secretary of State. That is another obligation, and it must be paid for. Should those whose properties are not connected to the drainage system be totally exempted from contributions?
I turn to the subject of the cleaning of rivers, a matter to which we all attach great importance. We have made dramatic progress. Over 30 different species of fish have been caught in the River Thames during the past year, including two salmon. On one occasion recently, when in Brussels, I rashly promised my German ministerial counterpart that I would catch a salmon from the House of Commons terrace in under a decade from the present time. Although I may doubt my ability to catch that salmon, I am confident, in view of the dramatic evidence of the cleaning of rivers, that the prospect of salmon returning to the Thames is not as remote as it would have been a few years ago. The point is that somebody must pay for the cleaning up of our rivers, and that money comes from the general service charge.
We must also consider the whole question of access to reservoirs and the subject of recreation and amenity provided by the regional water authorities. In the debates on the Water Act 1973 the point was often stressed that regional water authorities should pay due regard to ways in which our great reservoirs and rivers are used for recreational and amenity purposes. If people wish to camp along the riverside or to picnic in areas with pleasant prospects of water scenery before them, we must remember that all those amenities have to be paid for.
I thought it right, in this short cameo of a debate, to state that it is surely


reasonable to expect people whose properties are not connected to sewers to contribute to these areas of activity that are so worth while in our national life. If hon. Members have any further thoughts on this topic—whether they think the right contribution should be 20 per cent. or 25 per cent.—I shall be interested to hear their views.
Having stated general principles, I turn to deal with some considerable difficulties. We must first consider the administrative difficulties. I was grateful to the hon. Member for Braintree (Mr. Newton) for pointing out that nobody wants to go back on the House of Lords judgment. We are left with the question: if we face up to the situation, do we take action immediately in this Bill or do we make provision for the future?
That poses another considerable problem. If we were to take action now, local authorities might find themselves in great difficulty. I understand that there are two views among the local authorities. The Association of District Councils seems to take the view that it is reasonable to take some action now, but I am also advised that local authority treasurers take a different view. It is a matter that the local authorities will wish to discuss further. Certainly the Association of Municipal Authorities takes the view that any radical change brought about by the Bill will have serious repercussions in terms of feeding information to computers and the issuing of rate bills this year—in other words, the amount of work might not be able to be undertaken in time for action this year.
That leads me to the question of the consultation document, which, as I have promised, will appear shortly. The consultation document will deal with the future of water authorities. I cannot make any commitments tonight but I shall consider the matter seriously and keep in touch with the Opposition. If it is found to be impossible to act in another place, I have in mind to set out in the consultation document the way in which the Government previously reached 50 per cent. and the alternative suggestions which have been put forward tonight—for example, that 25 per cent. might be appropriate.
If we proceeded in that way there would be considerable advantage. There

would not be an untold delay because, as I have said before, we have in mind asking all the authorities—the local authorities, the regional authorities, and everyone else—to let us have their comments by the end of July. We particularly chose that time because we believe that some of the matters arising in the consultation document will require legislation, which will have to be introduced soon after that. Therefore, the end of July was carefully chosen to enable all matters to be considered and for the necessary drafting, and so on, to be undertaken. If it is not possible to move this matter in another place it certainly would be possible to include it in any legislation that arises from the consultation document.
Another important matter that has been raised several times is the relationship between the imposition of a 50 per cent. or 25 per cent. charge for the general service section of water authorities and the charge for emptying cesspits by local authorities. The hon. Member for Harwich (Mr. Ridsdale) raised a matter in this connection today and on a previous occasion. At first sight it seems to me that we must be careful not to impose additional charges on the domestic user. If we went back to the 50 per cent. or 25 per cent. charge without at the same time tackling the increased charges that local authorities are now making for the emptying of cesspits, we might double the burden. I have always taken the view that, ideally, those two aspects must be dealt with together. I am advised by all the lawyers that as emptying the cesspits is undoubtedly the responsibility of the local authorities and comes under local authority legislation we cannot deal with that part of the problem in the Bill. That enables us to concentrate on the great difficulty involved.
One solution has been canvassed before—indeed, I think it was put forward when the Water Act was in Committee upstairs. I confess that it has an attraction for me. It is that in order to stop the problems which the hon. Member for Bromsgrove and Redditch (Mr. Miller) mentioned, we should make it a duty of regional water authorities to undertake the emptying and treatment of cesspits and to charge the residents in the normal way for sewerage services. Obviously we could not


do that in the Bill, because the Bill is not the proper vehicle for such measures. Moreover, it would be an interference with the duties of local authorities. I could not advise the House to go down that road this evening unless we had properly consulted the local authorities.
When we were discussing local government reform I was utterly amazed by the passion with which local authorities wanted to hang on to the duty of emptying cesspits. I could never understand that. They let us know quite firmly that drainage and cesspit clearance were functions they wanted jealously to preserve. I do not know whether they were wise or not. However, we cannot proceed to remove these powers from the local authorities and impose them on the water authorities in this Bill. Even if it could be done in the Bill it could not be done without adequate consultation with the local authorities.
I recognise that the hon. Member for Ashford and his hon. Friends have raised a matter of importance and substance, which goes to the heart of the issue. I shall certainly give careful attention to everything they have said. If I conclude that it is possible to do something in another place I shall do it. However, for the reasons I have given, particularly on the relationship between charges for cesspit emptying and for the general service of water authorities, it may be impossible to do it in another place. In that case I undertake to have all the arguments canvassed in the consultation document that I shall be producing very soon, with the possibility that we can get agreement after consultation and return to the matter in the autumn, probably in another piece of legislation.
I give these undertakings, but of course I do so without commitment, because of the tremendous complexities. I am not seeking to burk this issue, only to take on board the interesting discussion that we have had, and give it the widest possible consideration. We can then try to get it right between us, though agreement on both sides of the House and with the regional water authorities and the local authorities.

8.45 p.m.

Mr. Graham Page: We are grateful to the Minister for the way in which he has

dealt with this subject and for the thorough way in which he has demonstrated what is passing through his mind. Of course, the clearance of cesspools must be dealt with if we are travelling along the road of a remission charge as in the Order. He said that he could not take action without consulting the local authorities and that he could not alter in this Bill their powers to empty cesspits. He will know that on Monday the House will be considering the Local Government (Miscellaneous Provisions) Bill. Perhaps he could find a place for it there. The Long Title of the Bill would certainly cover such a point. If the right hon. Gentleman is inviting me to do so, I will put down an amendment to remove from local authorities the duty to empty cesspools and to put in the requirement that the water authorities should do it free of charge as part of their general duty on sewerage.
I do not think the Committee will accept entirely his argument that it is impossible to make such a substantial alteration at this stage. This Bill seeks in Clause 2 to change the law, and the Government are therefore asking local authorities to change their system of collection. Clause 2 will give them a lot to do in the future. He is asking for that change in the law now and saying that in the summer he will bring out a consultative paper which will foreshadow some further change in the law and perhaps bring that into operation in a Bill in the next year or two. That means that there will be two changes in administration. Rather than face the prospect of local authorities and water authorities having to change the system all over again within a year or so, it would be of great benefit to them to get it right this time, here and now. If the right hon. Gentleman can leave enough time for this to be sorted out between the Bill leaving this House, going to another place and coming back to us, I am sure that that will be appreciated by all concerned. I cannot believe that local authorities would want to change the administration and have the law changed for them now, and then contemplate another change in 12 months' time.
I am sure that I speak not only for my colleagues on the Back Benches but also for those on the Front Bench when I say that if there is any way in which


we can help the programme along, the Minister can count on our full co-operation. I hope that he will be able to take the local authorities with him. As he has generously disclosed his thinking on the matter, I hope that what he has in mind will materialise in time to come into the Bill when it gets on the statute book.

Mr. Arthur Jones: I am sure that my hon. Friend the Member for Crosby (Mr. Page) has reflected the view of all hon. Members on this side of the Committee in thanking the Minister for the considerable thought and careful attention that he has given to the problems at issue here. The right hon. Gentleman said that this went to the heart of the problem, and we are grateful to him for the sympathetic consideration that he has afforded the advocacy on this side of the Committee both during our proceedings this evening and on Second Reading. I do not think it is going too far to say that the Minister has gone out of his way to support the case that has been made. That emphasises the strength of our advocacy, and the view that I gained from what he said is that he is with us if what is proposed can be seen to be practical in terms of implementation.
The right hon. Gentleman went a little beyond the functions referred to in the proposed new subsection (1A) of the 1973 Act. He referred to matters of health and public facilities. He spoke about the additional responsibilities that will flow from river clearance and the control of pollution, and whether 2 per cent. or 3 per cent. of the general service charge is a sensible figure for that. My hon. Friend the Member for Ashford (Mr. Speed) suggested 25 per cent., and my right hon. Friend the Member for Crosby suggested 50 per cent. That demonstrates that we are searching for an equitable and calculable figure. That may be a difficult proposition but I do not think that it is beyond the bounds of a sensible assessment, and perhaps the Minister will have an opportunity to look further into this between now and the later stages of the Bill.
Reference was made to the emptying of cesspools and the high level of charges in some parts of the country. I think we were surprised to hear the figure quoted

by my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller), just as we were surprised to hear the number of emptyings that is necessary. I do not know what the underground conditions must be like in those areas. There must be solid rock which prevents any liquid effluent from getting away.
There is a wide variation of charges within my constituency. One district council charges £20, while another charges £9·50 for what I should have assessed were similar circumstances. The suggestion that the regional water authorities should be responsible would have the advantage of creating a more common level of charge, and the scale of operation which they may be able to develop, perhaps over a period of years, may bring significant economies to the cost of emptying cesspools. It is a difficult job, involving transport and the carrying of specialist equipment, and there seems to be a substantial possibility of savings when the charges are considered in terms of the wide variations in levels.
I am grateful to the Minister for the sympathetic consideration that he has given to what he described as issues of significance. I know that we can rely on him to continue with his inquiries. On the Opposition side of the House we have already made most of our suggestions and it is now a matter of looking at the technical and consultative questions to which the Minister referred. I am confident that I speak for all hon. Members when I say that we are most grateful to the Minister for the consideration that he has given to the matter.

Mr. Reginald Eyre: I know that the Minister is aware of the concern that exists in Birmingham over the increase in water charges, and also of the view that equalisation should proceed more slowly. Perhaps he will bear these matters in mind when he further considers charges.

Mr. Speed: I hope that in the next few days we shall be able to help the Minister. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Alec Jones: I beg to move Amendment No. 38, in page 3, line 22, after 'above' insert—

'(i) for services performed, facilities provided or rights made available in the exercise


of functions under section 14 above, from persons liable to be rated in respect of hereditaments to which this sub-paragraph applies, and
(ii)'.

The First Deputy Chairman: With this amendment we may discuss Government Amendments Nos. 41, 42, 44 and 45.

Mr. Jones: In the Second Reading debate the hon. Member for Ashford (Mr. Speed) said:
On a more general point in seeking to prevent other Daymond-type situations in the future—as we all want to do"—
I think we all agree with that—
is it not possible for the definition in respect of refunds to apply for the purpose of future charges as well?"—[Official Report, 12th February 1976; Vol. 905, c. 669.]
That is the purpose behind Amendments Nos. 38 and 41, and those associated with them.
Clause 1 contains a precise definition of those properties which are without sewerage and so are eligible for refund. That applies only to refunds. We are seeking to apply the same definition to the water authority charging powers. In the amendments we are not only meeting our own requirements but are trying to prevent a further Daymond situation—and, I believe, we are meeting the request of the Opposition.
The amendment will also allow proportional charging for those public utilities which are rated by formula, where it is impossible to identify how much of the total rateable value is attributable to unconnected property, in the same way as refunds will be calculated for industries.
Amendment No. 42 is purely consequential on Amendments Nos. 38 and 41. Amendments Nos. 44 and 45 are consequential on the first two amendments, since in the clause we are rewriting Section 30 of the Water Act 1973. We need to define as Amendments Nos. 44 and 45 do, what is meant by "special rating".

9.0 p.m.

Mr. Arthur Jones: I am sure that my hon. Friend the Member for Ashford (Mr. Speed) will appreciate the points that the Minister has made. As I see them, the amendments bring the charging powers within the rebate arrangements described in Clause 1. We welcome that.

Amendment agreed to.

Amendments made: No. 39, in page 3, line 25, leave out 'occupiers' and insert
'persons liable to be rated in respect'.

No. 40, in line 27, leave out 'occupiers' and insert 'persons'.

No. 41, in line 27, at end insert—
'( )Subsection (1)(b)(i) above applies to a hereditament if—

(a) it is drained by a sewer or drain communicating directly or indirectly with a public sewer provided for foul water or surface water or both, or
(b) the person liable to be rated in respect of the hereditament has the use, for the benefit of the hereditament, of facilities which drain to a sewer or drain so communicating, or
(c) it is subject to special rating and not of a description specified for the purposes of section 1 of the Water Charges Act 1976 by an order under section 254 of the Local Government Act 1972.'.

No. 42, in line 28, leave out 'paragraph (b) of subsection (1)' and insert 'subsection (1)(b)(ii)'.

No. 44, in line 41, leave out 'and in that paragraph' and insert—
'( ) The following subsection shall be added at the end of the said section 30:—
(11) In this section".'.

No. 45, in line 43, at end add 'and
special rating" means rating under any enactment contained in sections 31 to 34 of the General Rate Act 1967 or under section 52 of the Post Office Act 1969, and includes rating under any order made by virtue of section 19 of the Local Government Act 1974 amending any of those sections.'.

No. 46, in page 4, line 3, leave out 'occupiers' and insert
'persons liable to be rated in respect'.

No. 47, in line 4, leave out 'occupiers of such hereditaments' and insert 'such persons'.—[Mr. Alec Jones.]

Clause 2, as amended, ordered to stand part of the Bill.

Clause 3

CITATION ETC.

Amendment made: No. 49, in page 4, leave out lines 12 and 13.—[Mr. Alec Jones.]

Mr. Alec Jones: I beg to move Amendment No. 50, in page 4, line 16, leave out from beginning to 'by' in line 17 and insert—
'"Public sewer" has the meaning assigned to it'.


This is a drafting amendment to delete the reference to "local statutory provision". That expression occurs only in Clause 2, which has the effect of inserting it into Section 30 of the Water Act 1973, which we were seeking to redefine. It is already defined, however, in that Act, so it is not necessary to define it again.

Amendment agreed to.

Mr. Alec Jones: I beg to move Amendment No. 51, in page 4, line 20, leave out '26 to 36' and insert '31 to 34'.

The Second Deputy Chairman of Ways and Means (Mr. Bryant Godman Irvine): With this we may take Government Amendment No. 52.

Mr. Jones: Again, this is a purely drafting amendment, but I had better explain it, as I saw the right hon. Member for Crosby (Mr. Page) looking askance when I so briefly described the last amendment. Sections 31 to 34 of the General Rate Act are the only sections to which we wish to apply our Order under Clause 1(8) of the Bill. Those sections cover the four nationalised industries rated by formula—gas, electricity, the Post Office and the water industry itself.
Amendment No. 52 is also drafting. It seeks to take account of an amendment to the General Rate Act 1967 which was made in the Local Government Act 1974.

Amendment agreed to.

Amendment made; No. 52, in page 4, line 21, at end add
'and includes rating under any order made by virtue of section 19 of the Local Government Act 1974 amending any of those sections.'.—[Mr. Alec Jones.]

Clause 3, as amended, ordered to stand part of the Bill.

New Clause

REIMBURSEMENT OF ADMINISTRATIVE EXPENSES

The water authority is required to reimburse local authorities for their administrative expenses under this Act'.—[Mr. Ridsdale.]

Brought up, and read the First time.

Mr. Ridsdale: I beg to move, That the clause be read a Second time.
This may seem to be a case of robbing Peter to pay Paul, because one ratepayer

or the other has to foot the bill. Bearing in mind what the Minister has said about my concern for the domestic ratepayer, which is very real—the domestic ratepayer also has to pay the water rate as well—I am conscious that the water rate is not rebateable, although I have pressed successive Governments to make it so. I have a feeling, however, that with the present high level of water rates, this will soon be forced on the Government.
This Bill will impose considerable extra costs on local authorities. In the past we have seen that where one authority subsidises another, or central government subsidises local government, we do not get proper value for money. I think it right that administrative expenses should be borne by the water authorities and that they should reimburse local authorities for the expenses they incur under this legislation. We would have a double check of both authorities and ratepayers would see that they get value for money.

Mr. Alec Jones: No one would object to the principle behind the new clause, but I hope to assure the hon. Member for Harwich (Mr. Ridsdale) that it is not necessary. I referred to this matter on Second Reading in reply to an intervention by the hon. Member for Carmarthen (Mr. Evans) who raised the same point.
I said then and repeat tonight that no costs will fall on rating authorities. They will be able to bill water authorities for their administrative costs. We are conscious of the extra work this legislation will mean for local authorities and are anxious to ensure that administrative expenses should not be borne by local authorities but that water authorities should meet these costs.
I am advised that this will be done through the Collection of Charges Order which will contain provisions for local authorities to recover administrative costs, just as they have recovered the administrative costs of collection over the past two years.
My advice is that the new clause is not necessary because its provisions are already in the Bill.

Mr. Speed: May I thank the Minister for his very helpful reply. Like my hon.


Friend the Member for Harwich (Mr. Ridsdale), I was concerned to see that there should be no extra burden on local authorities who, Lord knows, have enough problems anyway.
If I am not out of order and as we are reaching the closing stages of this debate, I should also like to thank the Minister and his staff for their helpfulness and courtesy in what, for reasons we all understand, have been rushed proceedings. Not many hon. Members have taken part in the debate, but the contributions have been of a high standard and shown considerable expertise. We are grateful that the Minister has promised to look again at a number of important matters with a view to possibly meeting our case.

Mr. Denis Howell: May I express my appreciation to the hon. Member for Ashford (Mr. Speed) and his right hon. and hon. Friends for the way they met us in difficult circumstances today. It is always difficult to try to get a Bill's remaining stages through the House in one go. We felt we had to do it for tremendous reasons of urgency and pressure. I am particularly grateful for what the hon. Member for Ashford said about my officials who have been under tremendous pressure to get the drafting right. I wish to express by appreciation to the members of the Opposition for their co-operative attitude throughout the passage of the Bill. I hope that that will long continue in other environmental matters.

Mr. Ridsdale: In view of the clear explanation which the Minister gave, I beg to ask leave to withdraw the motion.

Motion, and clause, by leave withdrawn.

Bill reported, with amendments; as amended, considered; read the Third time and passed.

PRICE CODE

9.11 p.m.

The Minister of State, Department of Prices and Consumer Protection (Mr. Alan Williams): I beg to move,
That the Counter-Inflation (Price Code) (Amendment) Order 1976 (S.I., 1976, No. 71), a copy of which was laid before this House on 22nd January, be approved.
We have two matters to debate which are incorporated in the substantive Order. The order deals with the Price Code investment relief and with certain aspects of the selective price restraint scheme.
I am glad to see here the Chairman of the Joint Committee on Statutory Instruments. He and I seem to spend a lot of time together. I commend him on the long hours he spends in the House, as he was in Standing Committee with me this morning. The Joint Committee on Statutory Instruments has rightly drawn the Order to the attention of the House, and I look forward to hearing the right hon. Gentleman's comments.
It will be helpful if I outline the purpose and effect of the Order and consider some of the comments made by the Committee. The provisions for a selective price restraint scheme were foreshadowed in July; this is not a new gimmick. The White Paper "The Attack on Inflation" states, in paragraph 33, that
Certain goods are of special importance in family expenditure.… Once it is clear that the pay limit is being effectively observed, the Government intend to ensure that the rate of price increase for a range of these goods will be held to about 10 per cent.
That is, 10 per cent, a year, or 5 per cent. over six months, for the goods covered by the scheme.
From previous debates hon. Members will be aware that it takes between six and nine months for any cost change, be it advantageous or disadvantageous, to work through. That explains why we are seeing now the price reflection of the pay package that was worked out during last year.
Sir Campbell Adamson, of the CBI, has made clear that industry has been able to participate in the price restraint programme only because of changes in raw material costs and because it is clear that the unions are observing the £6 limit. Industry is thus able to predict its costs six months ahead and to give meaningful


assurances. The package is, in a sense, the outcome of the success of the pay side of the counter-inflation policy.
On 27th January, my right hon. Friend the Secretary of State told the House of her successful discussions, and we had some interesting, if lively, exchanges. The hon. Member for Gloucester (Mrs. Oppenheim) managed to make her question nearly as long as the Secretary of State's statement. I do not begrudge her that. To be honest, I just envy her, because she was able to get away with it.
Last week my right hon. Friend gave details of the goods and the services covered. The House is very familiar with the fact that the aim of the scheme is to hold price increases over a range of goods to 5 per cent. over six months, from February to July, and that this will cover 15 per cent. to 20 per cent. of consumer spending and about 30 per cent. of nationalised industry spending by consumers.
It is a voluntary scheme, like the £6 pay scheme. I put it to the House that this is not a weakness; if anything, it is a strengthening of the scheme. Both major parties have discovered how difficult it is to have a statutory scheme that is being challenged continually. Therefore, in a democracy—if this is what democracy is about, and it is—if one can get a meaningful scheme, essentially this is the sort of consensus and the winning of participation by the people involved in our policies which demonstrates public support for the Government's objectives.
I am not suggesting that it is support for any particular party. However, the fact that one can arrive at a voluntary agreement on the pay side—which has been observed so far—and that one can also get voluntary agreement on the commercial side is a very creditable achievement in all the circumstances.
The Order in no way affects this voluntariness; indeed, if anything, it is intended to ensure that others who would wish to take part are able to do so, if by some marginal cross-subsidisation they now feel able to give commitments on certain of their goods. The Price Commission's Report for the third quarter of last year, with which hon. Members are familiar, indicated that some manufacturers' profit margins—hon. Members on both sides of the House have drawn attention to this—

are at their lowest level since the Code was introduced. Therefore, the Order permits cross-subsidisation at a manufacturing and service level, where it was not permitted previously—with slight exception. I must apologise to the House. My memory is being served to me on pieces of paper alongside me. The Order allows cross-subsidisation, and where this is required the Secretary of State is to give a certificate. This is the point at which the Joint Committee becomes involved. I shall develop that a little later.
Incidentally, I apologise for the fact that my right hon. Friend is not present this evening. It is not, as Opposition Members may suspect, because she is busy signing all the certificates. It is because, as the hon. Member for Gloucester is aware, she is attending another function, which is important in terms of Government business and is going on fairly late. I am afraid that there was a degree of optimism as to the time at which we might be starting our proceedings.
The Secretary of State would give a certificate that would enable a firm to recoup any losses on goods which it contributes into the scheme from other lines, which without this certificate would be unrecoverable. The Price Commission will be giving guidance on this, because as yet industry is not fully aware how it will operate.
I understand that about 8,000 data sheets are likely to be distributed by the Price Commission. Those go automatically, I believe, to Category 1 and Category 2 firms and will be available on demand for smaller firms at the Price Commission's various offices. We shall also publish a list of certificates that are issued, so that hon. Members on both sides of the House will be able to see exactly what we are doing.
The Joint Committee on Statutory Instruments has drawn attention to paragraph 137(1) of the Code, which allows the identification of goods for which cross-subsidisation would be permitted by means of a certificate from the Secretary of State. If I read the Joint Committee's observations correctly, what it is saying is not that the Secretary of State has no power to do this but that it is somewhat surprised at the way in which the power has been used. Implicit


in its comment, I think, is the thought that perhaps the full list should be written into the Code rather than allowing discretion, which must appear initially to be wide discretion, to the Secretary of State. I fully understand that concern and appreciate that Members of Parliament want to be sure that this is not an unlimited discretion. I hope to be able to allay any fears on that matter.
The House knows from previous debates on the Code that one problem is that it can be too rigid. That criticism has been made at various stages by almost everyone who has taken part in debates on the Code. On occasion we reach a situation in which flexibility is required in the nature of the policy being pursued and in which different rules may be required for different circumstances. We cannot always cover all contingencies by a form of words. The more tightly we draw the form of words, the more likely we are to exclude contingencies which both major parties want to cover. Therefore, it seems apropriate that sometimes special rules, when required, should be triggered by someone who is responsible and answerable to this House. Therefore, the Secretary of State can trigger these special conditions by the use of certificates.
I should immediately say that is not a precedent. Many hon. Members present are old campaigners on the Code. It is with some diffidence that I venture into this maze. However, the House will be aware that two certification procedures have already been approved to deal with special cases.
In January last year the House approved a special price rise regime to deal with possible or actual serious shortages. If I remember correctly, the Opposition welcomed that being done and saw the need for it. Indeed, they pressed for some such action in the period prior to the amendment's being brought in.
In June last year a similar certification process was introduced to guard against damage or a threat of damage to the balance of payments. I remember various questions being asked about this matter in the lead-up to this change. It is not a precedent; it had been done twice before, because the House recognised that there were situations in which flexi-

bility was required. This proposal is in accord with that precedent.
Certification was needed in this instance because the Order had to be prepared and laid prior to the completion of negotiations. Hon. Members will be aware that the negotiations went on literally up to the last minute. Therefore, it was impossible to spell out in exhaustive detail in the Order any form of words which would not limit our capacity to accommodate people in the late stage of negotiations. It has the advantage of allowing desirable flexibility in the event of other firms indicating that they wish to come into the scheme on this basis part way through its operation. I am not anticipating a queue of firms offering to do that.
This is not a hole-in-the-corner operation. It is not being done furtively and out of the public eye. The certificates are notified to the Price Commission and to trade associations. Full details will be published in the Edinburgh, London and Belfast Gazettes and in Trade and Industry. We are trying to make this operation as open as possible, consistent with administrative efficiency.
This power will not be dictatorial. Hon. Members who have studied paragraph 137 will know that it can be applied only in circumstances in which a substantial number of firms—it cannot be applied arbitrarily to individual firms—can restrain prices in accordance with the policy outlined in the White Paper and where the products or services are, in the words of the paragraph,
of special importance in family expenditure".
There are tight limits on the freedom of the Secretary of State to give these certificates. When she has given them, the House and industry will know about them. I hope that that explanation goes some way to satisfying the Joint Committee.
I turn now to the other half of the proposal in the Order—the extension of investment relief. The House will recall that this Government made the first meaningful concessions on investment relief. Until we made our changes, there had been constant and legitimate complaints from industry that the Code was curbing investment. We made concessions not only because they would help the survival and growth of firms but also because they would help the saving of jobs at a


time when unemployment was already causing enough difficulty.
As veterans of the Code campaign will recognise, paragraph 79 of the Order is basically all existing provisions plus existing amendments rewritten. It is substantially a tidying-up operation of which the right hon. Member for Crosby (Mr. Page) and his Committee should be in favour in view of the legitimate lecture he gave me this morning in Committee on the wording of one of the Orders. We hope that paragraph 79 is a gesture to that clarity and understanding which the right hon. Gentleman sought this morning. As he is smiling, Ihop that his benevolence will continue when he intervenes.
Paragraph 79A is new. When we reached stage 4 of the Code at the end of 1974 it was envisaged that the Code would probably end in March this year. Therefore, the investment relief at that stage was given as a one-off operation—a 12-month investment programme and a 12-month investment relief programme—but where the 12-month relief finished before the end of March, there were provisions for firms to run on with their existing price levels. At the time we indicated our willingness to accommodate this point, and industry, quite rightly, made it clear that there must be continuity if we talk in terms of meaningful investment because it is unlikely that new investment would be a one-year operation and there would have to be an assurance that any relief would continue into the future.
As the House will be aware, the Government took powers in the Remuneration, Charges and Grants Act to extend the Counter-Inflation Act to the end of July this year. That was completely consistent with the counter-inflation wage package proposals. I understand that an Order-in-Council has been made today to give effect to that. It is a Treasury Order rather than one from my Department. Therefore, we need a bridge to accommodate the commitment of continuity of investment from March to the end of July. It would be the same sort of bridge as a 12-month investment relief commitment which ended before the end of March, under which we allowed the relief to run on.
We offer two options. We are trying to be as fair as possible to industry.

Industry can, if it wishes, continue as it is at present until 31st July. We assume that it will weigh the advantages between that and the alternative course, which is to submit a new claim—which it would do if it believed that that would raise more finance—based on the second year's programme. It is the purpose of paragraph 79A to provide that bridge. It has been welcomed by industry, and we are pleased to note that until now the rate of uptake on the existing investment incentive has been substantial. We hope that this will make it easier for industry to think ahead. I appreciate that there will be some uncertainty until it knows what will happen after July.
When we judge Orders which deal with the Price Code and the price check scheme we must be aware of the background of inflation prevailing at the time. I am sure that the House is encouraged by the fact that the annual rate of rise of the Retail Price Index has declined for the fifth consecutive month and that January saw the largest fall since 1962.

Mrs. Sally Oppenheim: What about the price of potatoes?

Mr. Williams: With respect to the hon. Lady who is muttering away, we are hardly responsible for what happens to potatoes when they are in soaking wet ground. The food index, less seasonal foodstuffs, has shown its eighth successive six-monthly figure fall. The wholesale price index, year on year, continues to fall. In January, the year-on-year figure was 18 per cent., whereas a year ago it was over 28 per cent.
This is the time for us to maintain our determination, and the price check scheme is helpful in this respect. It ensures that the benefit from the lower pay demand effect from the TUC package is passed on to the consumer and that the consumer can see that it has been passed on. It is important in real terms to those who have already settled to see that there have been benefits from their settlement. It is important to those about to settle that they should see that earlier settlements have helped to achieve the targets that both sides of industry want.
Although it is important to break into the mechanics of inflation, it is equally important to break into the psychology of inflation. We hope that the price cheek operation, by bringing home clearly


to people the benefits of the counter-inflation policy so far, will help to break the psychological inflationary spiral.

Mr. Norman Lamont: Is the object of the price check scheme actually to reduce prices or is it simply to demonstrate to people that price increases are becoming smaller?

Mr. Williams: We would not need the cross-subsidisation proposals if it were not going to help to keep prices down and we should not have needed the first part of the Order. It is important also that industry and the public should know that we are now getting a substantial island of price stability. I would not write this off as an insignificant achievement. I am sure that the hon. Member for Kingston-upon-Thames (Mr. Lamont), with his knowledge of the psychology of inflation, will appreciate the importance of the public realising that it is now possible for us to break the inflationary trend in which we have been trapped for too long.
I hope that the Opposition will realise that they cannot on the one hand condemn the price check sheme as cosmetic, as they no doubt will—they certainly have done so far—and on the other hand complain that it has an adverse impact on profit margins. It is difficult to proclaim that it is doing both.
It is hard to reconcile the attempts of the Opposition, judging from their comments which have been published, to trivialise the importance of the campaign with the genuine commitment which we have received from the CBI and the Retail Consortium. Negotiations would not have been so prolonged and difficult if the operation had been meaningless. I urge them to bear in mind that it is counter-productive to slap the CBI and the Retail Consortium in the face with their comments when these organisations are trying to co-operate in the brake into inflation.
On "The World at One" on 11th February, Mr. John Sainsbury—a name which is not unfamiliar to this House—the joint president of a firm of a somewhat similar name, said:
I am optimistic that the rate of inflation is declining. Anything that we can do that encourages people to recognise this and that we are trying to unite behind the battle

against inflation is a good thing and I support it.
I agree with him.
I would remind the Opposition that they cannot be opposed to the scheme in principle. The hon. Member for Gloucester may chortle away there, but I would draw her attention to the fact that the Shadow Chancellor, her right hon. Friend the Member for Surrey, East (Sir G. Howe), has dirtied his hands in the past, as I gather she would see it, by trying a similar operation. The right hon. Gentleman, when in office said:
It has been suggested…that we should contemplate the possibility of an agreement to hold stable the price of certain items in the housewives' shopping baskets for a limited period of time…We have, in fact, investigated the possibility of it, but we have not been able to secure sufficient agreement upon the scope and scale of that scheme to make it practicable."—[Official Report, 17th October 1973; Vol. 861, c. 331.]
So, far from being against it in principle, the Tory Party when in government tried to achieve a similar scheme. The Tories tried and they failed. Now they are overcome with bitterness because someone else has succeeded.
The Tories may say that it was worth trying when they tried because margins were high.

Mrs. Sally Oppenheim: Yes.

Mr. Williams: Do I understand correctly? Was it a "Yes" that came across the Floor of the House?

Mrs. Sally Oppenheim: Yes.

Mr. Williams: I thought it was. So the hon. Lady is arguing that it was worth while trying at that time because the margins were high. However, it says little for the persuasive power of the Shadow Chancellor if he failed at a time when industry could afford it yet my right hon. Friend the Secretary of State has succeeded at the very time when, perhaps, industry can least afford it. That argument comes badly from the Opposition.
Indeed, over the past two years the Opposition—particularly the Opposition Front Bench, which has had a number of tenants, whose transience has been notable—have complained consistently at every move made by the Government to defeat inflation. The Opposition opposed food


subsidies. We had a last-moment, death-bed repentance, just before the election, and the Opposition fell back into their "good old ways" immediately afterwards. They opposed the voluntary agreement on prices and the £6-a-week restriction on income rises.
Now the Opposition oppose the Price Check scheme. They oppose it on fundamental points, by contending that we are wasting 1p a head on advertising so that the public know about the scheme and that we are wasting £1 per shop to make available the display advertising that we are providing. This is the sort of extravagance that the Opposition object to, but it has nothing to do with the basic substance of the scheme.
The Opposition have howled at nationalised industry price increases. At the same time they howl for nationalised industry viability, conveniently ignoring along the route that if we had not had the Tory deficits on the nationalised industries the climb back to viability would not have been as steep and as unpleasant.
The Opposition are furious that the Government will attain their price targets. I urge the hon. Lady to recognise the importance to all parties of our defeating inflation.

Mrs. Sally Oppenheim: The hon. Gentleman is treating the House to some sanctimonious humbug. Will he acknowledge that when the Labour Party was in opposition it did everything in its power to encourage those with bargaining power to break and to destroy our counter-inflation policy? If it had not done so, we would not have the rates of inflation that we now have.

Mr. Williams: The hon. Lady's memory is vague. Speaking from that same Bench, members of the Labour Opposition did their best to offset the inflationary impact of the Tory Government's VAT proposals by keeping an eye on the way certain traders effected the changeover to VAT, thus doing the Tory Government's job for them in that respect.
The hon. Lady gets very het-up about these matters. It is possible to argue cases without getting het-up. We are dealing with two of the most important

and urgent problems facing the country. The electorate will not forgive the Opposition if they trivialise the issue, as to some extent the hon. Lady did in her supplementary question when the statement on this scheme was made.
I hope that tonight we shall hear a statement of policy and some thinking from the hon. Lady. I hope that we shall not have the usual nit-picker's orgy to which she treats us every time she participates in our debates. I hope that, for once, the Opposition will rise to the occasion.

9.39 p.m.

Mrs. Sally Oppenheim: I shall try to lower the temperature of the debate after the provocative contribution of the Minister of State.
I start by expressing regret at the fact that the Secretary of State is not present. She has explained the reason for her absence, but this is the third occasion on which she has been prevented from being in the House. The first was at Question Time. The second was when she arrived rather late for a debate on the Gracious Speech. On this occasion she is absent, again due to an outside engagement. We understand that there are outside engagements which cannot be changed, but after all it is the Government and not the Opposition who arrange the business of the House. If there were a pressing engagement they might have arranged the business differently. It is not as if the right hon. Lady has a great deal of work to do on the Floor of the House.

Mr. Alan Williams: The hon. Lady is fully aware that the Question Time which my right hon. Friend missed was the first that she has missed in two years of Government. That is a commendable record for any Minister. The hon. Lady will equally bear in mind that it is a normal convention within the House for Orders to be dealt with by Ministers of State, and very often by Under-Secretaries of State. There is nothing unusual about what is happening this evening. Further, I should have thought that the explanation given by my right hon. Friend would have satisfied the hon. Lady. I am afraid that her opening comments lead me to suspect that the rest of her contribution will be as superficial as usual.

Mrs. Oppenheim: I am criticising the Government's business managers for not


arranging things so that the Secretary of State could be present on this occasion. We believe that this is an important debate. There are a number of questions that we want answered and we should have liked them answered by the Secretary of State.
The Minister of State in his introductory remarks and throughout his contribution, and the right hon. Lady in launching her selective price restraint scheme, have made a great deal of the fact that the rate of inflation is now slowing down. However, I hope that they will not overlook that although the rate of inflation may be slowing down, prices are still increasing. The year-on-year rate of inflation is still a horrific 23 per cent., only slightly less than the appalling near 27 per cent. of last year.
Probably even more people are suffering hardship now than they were during the peak of inflation as a result of mounting unemployment, short-time working and declining living standards. Hardship is suffered by a great many people because of the excesses of a few and the negligence of the Government. Nowhere was that more clearly illustrated than in a statement from Age Concern in the Sunday Telegraph this weekend, which demonstrated that married and single pensions are now of less value than before the Government took office because of the rise that has taken place in the Retail Price Index. It will take a good a deal more than a rash of little red triangles to convince people that things are getting better or that they herald some great and significant achievement.
Perhaps the part of the Order relating to the selective price restraint scheme is best described as the neutralising factor, the means whereby certain prices can rise to compensate in some cases and in certain circumstances for those prices which have not risen by more than 5 per cent. under the scheme. That is a feature of the scheme which, curiously enough, the right hon. Lady did not find it necessary to mention in her official Press hand-out on 11th February when the scheme was launched. That is why the relief of cross-subsidisation has had to be given.
The other reliefs that are given in the Order have been given in conjunction with the selective price restraint scheme. That is because, as the hon. Gentleman has

acknowledged, profit margins have been eroded at a serious rate over the past two years. As he has rightly said, they are now standing at their lowest recorded level, having fallen on average by about 40 per cent. This is a matter of great concern when we have regard to the damaging effect on investment and employment. The Government have driven themselves into an impossible corner in pursuing price control.
It is ridiculous for the Chancellor to bellow at industry and commerce to invest and create employment when the Secretary of State for Prices and Consumer Protection is preventing them from doing so because of the continued operation of the Price Code in its present form. When the right hon. Lady started introducing investment relief in December 1974 we were told that she had done what was necessary to preserve investment and employment. On 2nd December 1974 she said:
…although we are willing to go a considerable way towards trying to guarantee employment and investment in so far as we are able over the coming couple of years, I believe that we have struck a difficult balance at about the right place."—[Official Report, 2nd December 1974; Vol. 882, c. 1153.]
In that same debate the Minister of State made the position even clearer. He said:
My right hon. Friend the Secretary of State made it clear today that her proposed amending of the Price Code was done with the primary object of safeguarding investment and jobs."—[Official Report, 2nd December 1974; Vol.. 882, c. 1195–96.]
What has happened since then? According to the Department of Industry's estimates, the volume of investment in manufacturing industry in 1975 fell about 13 per cent. below the level of 1974, and a further fall of 5 per cent. to 8 per cent. is expected in 1976. If we look at net investment, after deducting capital consumption, the record is far worse. The real net investment of manufacturing industry is estimated to have fallen by 30 per cent. in 1975, according to the Economic Editor of The Sunday Times.
It is no good the right hon. Lady, or the Under-Secretary of State, in one of his new-style, ferociously declamatory winding-up speeches, shrugging off the problem of investment by repeating—as the right hon. Lady repeated in her speech


last night—that the Price Code was introduced by the Conservative Government and that she has relaxed it on a number of occasions. The Schedule to the Order extends the existing investment reliefs because the Code itself is to be extended under the Remuneration, Charges and Grants Act.
It is true that the Price Codes was introduced by the Conservative Government, but against a very different background from the present situation. It is equally true that it has operated under the present Government against a background for nearly 18 months of no pay restraint whatever and for the last eight months against a background of severe recession.
The Minister of State boasted of reliefs and relaxations. The Secretary of State had tightened the Code in two significant ways in 1974 by establishing the three months' interval between price increases and by reducing by 10 per cent. the limit on distributors' gross profit margins. Let us have no more half truths from Ministers in the Department about their record. Let the House not underestimate the seriousness of the damage being caused by the operation of the Code in its present form.
The Minister of State referred to the beauty of the whole-hearted participation in the selective price restraint scheme. Let there be no misunderstanding that the right hon. Lady made commerce and industry an offer they could not refuse. She said that if they were not prepared to accept a selective or a voluntary programme, she would tighten the Price Code yet further. It would have been interesting to see what would have happened had they called her bluff. But it is true to say that the decision to participate was not embarked upon with unqualified enthusiasm throughout the retail trade.
I have a letter from a department store in which the correspondent wrote:
I thought…you might care to know that there are many retailers who strongly object to the scheme—partly because we believe it to be a nonsense, and partly because we are utterly fed up with the spate of legislation which comes to us these days from so many Government Departments. The Retail Consortium has gone through the motions of supposedly supporting the scheme (our association, the Retail Distributors Association, representing all the department stores in the country, actually abstained)

because we do not like to be accused of failing to be patriots, but many of us believe that on this particular issue we should have taken a firmer stand.

The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): For the sake of clarity, does the hon. Lady associate herself with those sentiments, and indeed does she agree with them—particularly the remarks by the Retail Consortium?

Mrs. Oppenheim: I am in no position to know about the inner workings of the Retail Consortium. I have a great deal of sympathy with the remarks made by the writer of that letter.

Mr. Alan Williams: On a point of order, Mr. Deputy Speaker——

Mr. Deputy Speaker (Mr. Oscar Murton): Is the hon. Member raising a point of order?

Mr. Alan Williams: It is a point of order, Mr. Deputy Speaker. The hon. Lady has quoted from an item of correspondence. We have no way of knowing who it is from or what is its origin. Are we allowed to ask the hon. Lady to indicate its source so that we can assess the merits of the comments, or ask for a copy of it to be made available to hon. Members?

Mr. Deputy Speaker: That is a matter for the individual hon. Member concerned.

Mrs. Oppenheim: I am not prepared to quote the name of the person who wrote the letter but I am prepared to send the Minister of State, on a confidential basis, a copy of it. My hon. Friends can also, on a confidential basis, have a copy of the letter, as can Hansard. However, I am not prepared to mention the name of the author of the letter in the House. In any case, the matter is academic because the right hon. Lady has now accepted that the Code, as the Minister of State has said, cannot continue to operate in its present form after the end of July.
As the Ministers in the right hon. Lady's Department have said on other occasions that the effect of removing it will add about 4 per cent. to the Retail Price Index—a figure, incidentally, which we do not accept and which I believe is not accepted by CBI—perhaps when


the Under-Secretary concludes the debate he can tell us whether this means that the selective price restraint scheme is to be followed by a 4 per cent. rise in the Retail Price Index after July? That is an interesting point to which we should like to have a reply.
It is fair to say that the Order includes an extension of investment relief which is slightly, and only slightly, supplementary to that in existence by providing the new option which the Minister has put forward tonight. Apart from that, the main relief, to which I have already referred, constitutes the second of two—as I consider them to be—necessary safeguards to allow prices to be increased under the selective price restraint scheme.
The first safeguard is the escape clause in the voluntary agreement, which does not appear in this Order, whereby the price of items on the list may be raised if circumstances justify it. The second safeguard represented in the Order will, of course, allow price increases to be transferred to items not on the list but possibly of equal importance to poorer families. Indeed, no list whatsoever has been published of items sensitive to low income families on to which cross-subsidisation under this Order cannot take place.
Also, the method of calculation proposed for cross-subsidisation is both complicated and open to fairly wide interpretational differences, and not merely the excess over the 5 per cent. Any price increase entitlement on an item included in the scheme can, in fact, be transferred. There is no doubt that this was included, quite rightly, in order to avoid intensifying the distortion of demand and competition already inherent in the scheme.
I must congratulate the Minister and his right hon. Friend on the modesty of the low profile they have been able to assume in their statements on these reliefs, especially on 11th February when the scheme was launched. Also, as the Minister of State has made clear, the Joint Committee on Statutory Instruments was highly critical of the fact that although the Order refers to the selective price restraint scheme there is no official document in existence, and critical of the extent of the Secretary of State's power.

Of course I accept what the Minister of State said that this is not unprecedented, but following a bad precedent is not necessarily a good thing. However, the inevitable consequences of attempting to link together a flexible voluntary agreement with a statute is to highlight just how much compromise and qualification has been necessary to secure agreement and to change the whole scheme since its inception.
As long ago as last October the Minister of State, in a widely reported speech, described the scheme as specifically designed to help low-income families—a feature notably missing from the right hon. Lady's statement launching the scheme on 11th February. He further claimed that the nationalised industries would be included. That claim has been substantiated only in a highly diluted form since it includes only gas, telecommunications and some postal rates. Indeed, it was not without irony as the Minister of State has already remarked, that on the day the scheme was announced the adjacent headline in most newspapers reported considerable increases in electricity and coal prices and rail fares during the period of the selective price restraint scheme.
The hon. Member spoke of the part that my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) played when in Government in trying to obtain a voluntary scheme. The Minister of State read a quotation from Hansard which I do not have, but I recall that the statement quite clearly indicated that the scheme was abandoned because it was found not to be practicable. That does mean not that my right hon. and learned Frend failed but that he found it impracticable to proceed in the circumstances.

Mr. Alan Williams: The right hon. and learned Gentleman said that he had not been able to secure sufficient accord on the scope and scale of the agreement. He made it clear that he could not secure an agreement, not that it was impracticable.

Mrs. Oppenheim: It was not a scheme like the one now before us. It was a much smaller scheme. It did not resemble, either, the ill-fated voluntary agreement by the Secretary of State which resulted in the biggest rise recorded in the price of the goods it covered in recent years.


Perhaps, therefore, it was as well that my right hon. and learned Friend did not succeed in his negotiations.
Today we have heard about a staggering increase in rail fares—the fourth in 14 months. The Minister of State may claim that price restraint under the last Conservative Government is responsible for what is happening in the nationalised industries today. However, I remind him that that price restraint has been more than compensated for by repayments by this Government under various statutes. How much more helpful it would have been to consumers and everyone else if the Secretary of State had turned her attention from this jiggery-pokery to the degree of cost effectiveness in the nationalised industries and the effect any lack of it may have on price increases. The rail fare increase alone could almost neutralise any effects of the selective price restraint scheme, even if the scheme is entirely successful. No wonder the right hon. Lady's statement was more notable for its apologetic tone and its qualifications than for anything else.
At the Press conference to launch it, as I understand from an article in The Grocer, Lord Redmayne, representing the Retail Consortium, made it clear that no more could be done to hold back prices and margins beyond July. Does that mean that the floodgates will inevitably open on an unsuspecting public after the scheme ends? That is another ambiguity which has not been made clear. But this is not likely to happen, for a number of reasons which are totally unconnected with the scheme itself.
The Secretary of State will be disturbed at the number of price increases which took place on listed items just before the scheme started and which is indicated by the complaints I have had, if they are correct. In any case, whereas the scheme covers items which constitute 20 per cent. of normal family expenditure, four items alone—milk, beer, cider and cigarettes—account for 10 per cent., and a number of items included in the scheme have been the subject of fairly recent price increases. Milk went up by 21½ per cent. last November, bread by 4 per cent. last December, and several brands of beer went up as recently as last month. Laundry and dry cleaning charges went up by 8 per cent. just before November. I shall be kind enough not to set out

the list of articles on which the Chancellor increased the price either by imposing a new tax or increasing the tax.
My modest criticisms of the scheme, which the Minister found so objectionable, were subsequently dwarfed by those of some newspapers. In fact, The Economist described the scheme as having
finally flopped into the air
while The Guardian, hardly a pillar of the Tory Press, said
As a direct way of tackling inflation the scheme is pretty irrelevant",
and it went on to say in its leading article that the scheme was no more than a red herring. As for the cost of publicising the scheme and the method to be employed, words failed me when it was announced, but I am glad to say that I have regained my power of speech. Words did not fail a number of correspondents from whom I have heard, however. I should like the Minister to see the view expressed by a number of correspondents, both consumers and retailers. One retailer was incensed at having received the kit when he did not sell one item listed in the scheme.
The choice of the little red triangle Lego seems, under the circumstances, to have been singularly unfortunate, since in the Highway Code it is used in a number of ways to signify "a hazard ahead", the most appropriate of which in the case of this scheme is one that signifies
two-way traffic crosses one-way road.
Would it not have been more honest, in view of the amendment that we have before us to the Price Code, if as well as issuing little red triangles to be displayed on those goods that are not to rise by more than 5 per cent. the Department of Prices and Consumer Protection had issued little labels showing arrows pointing upwards to be displayed on those items on which prices have been raised under the cross-subsidisation provisions in this Order?
As for the half-page advertisement that appeared in the newspapers over the weekend, I would have thought that it was in breach of several of the basic tenets of the advertising code, and a breach of the Trade Description Act itself, because it states categorically that the items on the list will not increase by more than 5p in the pound over the next six months.


What of the operation of the escape clause specifically to allow them to rise, referred to in the right hon. Lady's statement on 27th January, at column 248 of Hansard? This is the escape clause whereby a retailer or manufacturer can withdraw from the scheme.
Under every little triangle in the advertisement, in almost invisibly tiny print there was a welter of ambiguity. There were such qualifying statements, as for example, in the case of biscuits, "some varieties", of light bulbs "60 watts only", of household textiles,
some sheets, towels and materials",
of shoes,
some for adults and children",
and so on. There was no mention under the triangles relating to beer and cigarettes that this was going to be 5 per cent. computed, for example, on a weighted average basis. That is hardly a shining example of the clear presentation of information to consumers.
What about knitwear? This was clearly included in the list issued by the Department on 11th February, but from the Daily Telegraph of 17th February I learned that the knitwear manufacturers had accused the right hon. Lady of misleading the public by including knitwear in this list and the president of the federation had called upon the right hon. Lady to make it clear that knitwear would not be included in the list without further redundancies being created. I have not heard of any announcement——

Mr. Alan Williams: Perhaps I should see the letter.

Mrs. Oppenheim: The hon. Gentleman does not have to ask to see the letter. It has all been published in the Daily Telegraph, and so far I have not seen it refuted by the right hon. Lady in any newspaper. No doubt the Minister will deal with this.

Mr. Alan Williams: The hon. Lady referred to the original document. If she reads it she will see that it says "lines of", and if she looks at what appears in the Press she will notice that the qualification "lines of" was omitted. Instead of being "lines of knitwear", what appeared in the Press was "knitwear", and, understandably, as it was only the Scottish Knitwear Association

that had made the agreement. Knitwear manufacturers generally objected. The words "lines of" appeared in the original document.

Mrs. Oppenheim: I am so grateful to the Minister, because I have here the original Press statement issued by the Department. It clearly says
Clothing, footwear and textiles. Lines of clothing including: women's and girls' dresses…men's…suits…infants'…dresses",
and on a separate line, with no qualification, one finds the word "knitwear" and it then goes on to say
Some lines of adults' and children's footwear.
That is typical of the type of ambiguity that is associated with the Department. I am told to read between the lines, and that is just what consumers will do with this scheme. I have been justifiably right to deride the selective price restraint scheme for what it is—the tardy antics of a Government bereft of any options.
I take the slightly unusual step of praising the right hon. Lady for an achievement to which she has not attached significance and one on which, regrettably, she has not sought to build enough. It was a considerable achievement to gain the agreement of the TUC last July to a pay freeze, or the £6 limit, and at the same time its acceptance that it was not possible to tighten the Price Code further. On the basis of that acceptance and in the light of the present rates of unemployment, could she not gain the acceptance of the TUC that the Price Code, if it continues in its present form, will cause greater damage to investment, more unemployment, and that it is of residual relevance to prices? Could she not get them to accept that the shenanigans over the selective price scheme have no relevance?
Is there never a time for the simple truth to be told? Could the right hon. Lady not accept that people are ready to accept the inevitable and to understand that although pay is being restrained, although limits are being observed, prices will inevitably go up and living standards will fall? That is unfair to a good many people who have not contributed in any way to this situation. It is the price that must be paid for the fact that the Government have left themselves no alternative by pursuing political objectives.
I submit that whether the right hon. Lady, the Government, the CBI and the TUC want to continue to deal in delusions or not, the people are no longer under any illusions. They can see what is happening, and they are sick and tired of the sham and chimera. I find it deeply depressing that the right hon. Lady, the TUC and the CBI and the Retail Consortium have so little faith in the common sense of the people of this country that, no doubt in good faith, they really believe that the people—consumers, trade unionists and everyone else—cannot tell whether prices are rising without months of negotiating a half-baked scheme and £1 million of their own money to convince them. As an exercise in so-called psychology it is naive in the extreme. As a form of communication it is flawed by imprecision and clouded by ambiguity. The right hon. Lady's earlier shopping basket was singularly ill-fated.

Mr. Mike Thomas: It was not.

Mrs. Oppenheim: One can fill that shopping basket only two-thirds full today

for the same money as that with which the right hon. Lady filled it.

Mr. Maclennan: Mr. Maclennanrose——

Mrs. Oppenheim: The hon. Gentleman will be able to speak and deal with that matter. He will no doubt make a trivial speech and will deal with a trivial point.
I hope for the sake of everyone concerned that that shopping basket's unpromising successor will not share the same fate. I also hope that this will be the last amendment made to the Price Code, and that it will be the last debate on the Price Code in its present form. Perhaps its most fitting epitaph was in The Guardian on Monday. In an article headed
The story of the great prices check bamboozle",
Frances Cairncross wrote:
When price controls were really biting, the United Kingdom had its fastest ever rate of inflation. In their wake has come the highest post-war level of unemployment and the sharpest drop in investment. What sort of a recommendation for a policy is that?

10.9 p.m.

Mr. Mike Thomas: I share the hope of the hon. Lady the Member for Gloucester (Mrs. Oppenheim) that this will be the last debate on the Price Code, because we would not then have to listen to the sort of claptrap we have heard tonight on what I regard as a serious matter. Nothing would give me greater joy, except perhaps if the hon. Lady moved over to other interests in the Shadow Cabinet.
If the hon. Lady looks with more care and does her homework on the figures to which she referred, she will find that precisely because those calculations did not take account properly of the uprating of benefits in July 1974, she has the figures wrong. I want to take a moment to give the genuine figures because, in the light of her assertions, they need to be revealed repeatedly and accurately by those who know them.
Since the Government took office, the spending power of the worker on average wage has risen in real terms by about 1 per cent.; the pensioner couple on State pension have seen their real income rise by about 13 per cent.; the single pensioner has seen his income rise in real terms by about 15 per cent. That is a record of which the Government are justifiably proud, and the hon. Lady does herself no service by accepting inaccurate figures and perpetrating the inaccuracy, as she has done tonight.
The only other feeling I have about the hon. Lady's speech is one of compassion for the hon. Member for Kingston-upon-Thames (Mr. Lamont). It must be galling to him that, unlike my right hon. Friend the Secretary of State, she is so anxious to get every headline, even in a short debate at this time of night, that she cannot resist the chance of putting a speech over even on such an occasion as this.
I was among the sceptics, as perhaps the hon. Lady will allow, when the Government produced their White Paper, "The Attack on Inflation". I was among those who said in the debate on it that I believed that there were many obstacles in the way of the Government achieving the price targets they had set themselves. Now, as a former sceptic, I have to say that many of my fears, and

many of the fears expressed in florid language by the Opposition, have not been realised, and that the Government do now seem on target for a single figure rate of inflation by the end of the year. At least I am in a position to take joy in that, which the Opposition seem very much unable to do.
It seems to me that there are four possible problems on the prices front which may take us off target, however. They are the pipeline costs still working through, of which I do not think we have seen The last; the question of oil prices; the very serious question of the decline in the value of the pound, which threatens the prices policy far more than any other single matter we have to deal with: and the question of rising unit costs, because, with industry running under capacity, we are in the position where unit costs inevitably rise. I am concerned to know my hon. Friend's views on these matters.
I turn to the amendments to the Price Code that we are discussing and the price restraint scheme. Despite the hon. Lady's desire to prove that she is the only one in step and that everyone else is wrong and misled, the retail trade, the CBI and the TUC welcome the scheme. As one of those representing the interests of the co-operative movement, I am glad to make it clear that the movement also welcomes the scheme and will play its part in its implementation.
I want to make a critical note, however. We welcome the investment relief provisions and the provision for cross-subsidisation, but there is no possibility of cross-subsidisation if profits are not being made in any department. We are still running a grave risk of that being a substantial problem which affects the operation of the policy and affects the opportunity of the retail organisations to avail themselves of the provisions under the Code.
I want to quote two simple statistics. The food sector is running at about 30 per cent. of its reference level profits compared with about 50 per cent. six months ago. It is bad enough at 50 per cent. It is worse at 30 per cent. We need these profits to cross-subsidise. The Opposition cannot have it both ways by claiming the profit squeeze is terrible yet also saying that it is only cosmetic.
Let me put the nail in the cosmetic coffin by quoting one sentence from last month's Investors Chronicle. Mary Goldring, advising her subscribers, as she is no doubt paid and honourably obliged to do, about where to put their money in stocks and shares, says:
Watch for the manufacturers and/or retailers who stay out of the 'voluntary' scheme. They could be the firms to follow for 1976.
If the advice of Investors Chronicle is to follow the firms which stay out of the scheme, even that journal cannot think that the scheme is cosmetic, that it will have no effect on profits or that prices will not be restrained.
I am concerned about the degree to which cross-subsidisation may affect the poor. I will not bore hon. Members with a reiteration of my views on this subject, but the alleged objective of this scheme is to preserve the position of those most in need in our society. I give the hon. Lady the Member for Gloucester credit for her good points—I hope she might sometimes give me credit for mine—and she raised a valid point when she questioned how we could be sure that cross-subsidisation will not work by the prices of essential products rather than non-essential products being increased.
The Minister might reply that competition will prevent this or that the general squeeze in the retail market will see that it does not happen. I still believe that it is a great danger and I am not reassured by the absence from the list of products to be included in the scheme of three or our subsidised products—butter, flour and cheese. If they are not within the scheme, we have cause for concern that the prices of some essential products will not be restrained to 5 per cent. increases.
It is severely damaging to the credibility of the scheme that nationalised industries, which are at the behest of the Government, have not been included. I very much welcome the inclusion, on a voluntary basis, of the gas industry, but there are some very big holes left. The increased postal charges are an important problem, and reference has already been made to the British Rail fare increases, which are an important area of expenditure. I am much more

concerned about electricity where the equivalent of a 16 per cent. price increase is being sought and where prices have almost doubled in the past 12 months. Members of the Select Committee on Nationalised Industries were told by the chairman of the Electricity Council a few days ago that the Council and the industry "were not even asked" to join the scheme. I would like to know why.
Though the Opposition try to deride it, one of the most important aspects of the scheme is its effect on pay policy for the future. One sometimes feels that the Opposition want the pay talks to fail and for there to be no success or policy after 1st August. They seem to want the country to go back to the damaging free-for-all in wages which we saw before the £6 limit. If the scheme were cosmetic, if it had been introduced purely to influence pay talks—if all that were true, which it is not—I would still regard it as worth while.
In conclusion, I quote from a Sunday Times article which appeared last Sunday and which ended as follows:
It may be true that the goods included would not rise much more than 5 per cent. in any case. But for once, the public has the assurance in advance that they will not. That is of no small value as the pay talks take place.
That is the background to the Order. That is the real issue, and the Opposition spokesman failed to measure up to it.

10.20 p.m.

Mr. Graham Page: I am sorry that the hon. Member for Newcastle-upon-Tyne, East (Mr. Thomas) has "cooled it" a bit. I thoroughly enjoyed the brilliant speech made by my hon. Friend the Member for Gloucester (Mrs. Oppenheim), and I wish that we had warmed up the debate on those lines.
I shall not address the House on the merits of the Order. As the Minister said, I am the Chairman of the Joint Select Committee on Statutory Instruments. The House will have noticed the rubric on the Order Paper underneath the item, which refers to the Committee drawing the special attention of the House to the Instrument on the grounds that it makes an unexpected use of the powers conferred on the Secretary of State by the parent statute.
The Order is made under Section 2 of the Counter-Inflation Act 1973 which gave the Treasury—now the Secretary of State—power to prepare a Code for the purposes of that Act and stated that the Code and any change in the Code should be contained in an Order made by Statutory Instrument and might be varied or revoked by a subsequent Order so made. The point at issue in considering the validity of the Order is whether the operation of the selective price restraint scheme amounts to a variation of the Code which should be embodied in a Statutory Instrument to come before the House for debate whenever a variation is made.
The Order introduces several new paragraphs into the Price Code. I congratulate the Minister on the way in which the new paragraphs 79 and 79(A) have been introduced by rewriting them completely in the schedule to the Order, so making them easier to read.
New paragraph 137 is introduced by paragraph 3 of the schedule to the Order. It is a new paragraph in the Price Code which allows the Secretary of State to create the scheme. The scheme is not a particular document prepared by the Secretary of State; it is not even a list of products prepared by the Secretary of State. The provision is that the Secretary of State, if he is satisfied, can name certain products if they appear to him to have certain qualifications.
I am very grateful, on behalf of the Committee of which I have the honour to be Chairman, to the officials of the Minister's Department who were greatly informative in the evidence which they gave to the Committee. They maintained that the power given to the Secretary of State here was a power to designate by certificate the area of the Code and not a power to alter the Code. This is questionable, at least.
What the new clause says is that it is entirely at the discretion of the Secretary of State to state the products which come within this scheme and, therefore, the benefits which may be obtained by a manufacturer of certain products, and, on the reverse side of the coin, the manner in which perhaps the consumer will suffer by the cross-subsidising of products under this scheme.
Looking at the power given to the Secretary of State by the parent statute, I must admit that it is a very wide power. It is a power to write this Code and even under the Code to operate in a very wide manner. However, when a Secretary of State is given that power by this House, I submit that he should be meticulous in seeing that the manner in which he exercises his discretion is a subject that comes before the House and for which he is responsible to the House.
The Joint Committee on Statutory Instruments learned from the Minister's officials that at that stage—and, I believe, even now—there was no list of these products to which anyone could refer. I think that the Minister said in his opening speech that there had not been time to prepare this and that he wanted it to be flexible. There is nothing for which right hon. and hon. Members can hold the Minister responsible, because they do not know what is contained in the list. I was pleased to hear tonight from the Minister that this list will be published and that in due course we should know what is in the list.
However, then we go on to the stage at which that list can change from time to time, and I think that it is in contemplation in this scheme that products shall come into and go out of the list from time to time. It is doubtful whether the power that is given to the Secretary of State enables him to rewrite this list from time to time. The Joint Committee on Statutory Instruments was generous over this and said "Very well, perhaps he has that power but he must use it in a way in which he can be responsible to the House of Commons". Therefore, there must be publication of this list from time to time.
I should have thought that the right thing to do was to publish the list at the start of this Order so that at least we and the public could know what we are talking about, and if there are alterations in this list, to make quite clear that those alterations are known to the public and particularly to right hon. and hon. Members.
When a parent statute gives the Secretary of State such very wide powers, as the Counter-Inflation Act 1973 did, they must be exercised in a way that will enable the public and Members of this House to hold a Minister responsible for


the exercise of his descretion and will enable Members to question him on it so that he is entirely responsible to the House.
I think that the Joint Committee was eventually correct in deciding that there was this power, but this is a marginal case, and where such a wide power is given, the Secretary of State, through a Minister, should be prepared to take the responsibility of publication of the exercise of discretion and to be questioned on that discretion.

10.29 p.m.

Mr. Michael Neubert: Debates on amendments to the Price Code are becoming a fairly frequent feature of the parliamentary calendar. They are normally taken late at night and in a largely empty Chamber. Perhaps that is a measure of their significance—certainly on this occasion.
The Minister of State will forgive me for saying so, but he seemed unable to muster much conviction in his presentation of the proposals. Perhaps it may just have been, with his normal modesty, as he acknowledged, his diffidence in these matters. Whatever it was, he lacked conviction to the Opposition side of the House, because this scheme is certainly not very relevant to the fight against inflation of which it is said to be part.
As I came into the Chamber I saw shoot up on the television screens the term "counter-inflation". But measures, such as food subsidies and limiting price rises by this scheme, are not fighting and do nothing to solve the problem of inflation. They merely seek to mitigate the effects on certain categories of people. Therefore, we should not delude ourselves by discussing the two issues together as if they were one and the same objective.
My fear is not that the Government are engaged in an exercise of utter futility, but that in doing so they may become bemused as to the realities and come dangerously close to deception.
There is no mention in a quarter page advertisement in the popular Press put out on behalf of the Government that the effect of price rises on these limited products being kept down to 5 per cent. means that the prices of other products will have to rise more than they otherwise would. It is hardly fair trading when it

comes to public money being spent on Government propaganda. The public have a right to know the true situation.
My right hon. Friend the Member for Crosby (Mr. Page) spoke with great expertise on the technicalities of this Order, which he finds unusual. I find the comment of his Committee very apt when it refers to the Order making an unexpected use of the powers conferred by the statute under which it is made. That is true in more than one sense. Who could have imagined that, given the Price Code's intention of controlling and, if possible, keeping down, if not reducing, prices, one of the two purposes of the Order would be to put up prices higher than they would otherwise be? The public have a right to know what the Government are about in putting forward such a proposal.
Over the whole generality of commercial transactions, this measure is not intended to make any jot or tittle of difference to the cost of living in the general sense. It may make some difference to people in certain categories of need who use these articles which are to to be restrained in price for six months, but it will not reduce prices in the totality because it specifically allows for prices to go up in compensation. That is why we are here.
If the Government are engaged in a political ploy, they should say so. Let us have none of this humbug and eyewash about how they are fighting inflation and bringing prices down, because it is totally irrelevant. It is, as the Minister acknowledged somewhat late in his lengthy speech, a campaign of psychology. It is the softening up of the trade unions in preparation for the much wider and more significant battle which is to come this summer. The Government may have had a legitimate purpose, but they should not cloud that purpose by presenting the Order as anything but a political stratagem.
We have reservations, but not so much with the scheme. It was a matter of bad luck, for example, that the Order should be introduced and a day later there should be an announcement that rail fares will go up by about 17½ per cent. It makes a nonsense when a fundamental factor in the household budget, such as a season ticket, is not included. For


example, in my commuter constituency the impact will be 65p a week or about £25 a year—an increase of 15 per cent. That is what matters to my constituents who need to go to work in the centre of London and have to pay fares out of taxed income. It is not important to them that a glass of cider is to be restrained to an increase of 5 per cent. over six months.
The Minister may say that we are trivialising this major step forward in the campaign against inflation. However, it seems hard to trivialise the matter further than the issuing of triangular-shaped sticky labels to shops all over the country. We have come to a pretty pass when it is necessary to adopt such measures at public expense to achieve what is essential in the interests of the country at large.
Let hon. Gentlemen not claim that we fight every measure that they put forward to halt inflation. Their inescapable legacy is the year during which the social contract—that free-for-all to which the hon. Member for Newcastle-upon-Tyne, East (Mr. Thomas) referred so scathingly—was conceived. They will have that on their conscience to the end of their days. Inflation ran at 25 per cent. that year—five times the rate in West Germany and three-and-a-half times the rate in America. They let wages rip for a full 12 months. Let them not come to us tonight and say that we are trying to halt measures that will stop inflation.
Inflation should have been stopped last year. We know now that the reason for the welcome abatement in the rate of inflation was the halt of wage rises which averaged 35 per cent. last year. If that is so, it was within the Government's power to stop inflation before it got out of hand. Although the rate of inflation is decreasing, it is decreasing only from levels that were unthinkable to levels that are still outrageous in a modern society and that still causes tremendous damage.
My principal concern is not with the Minister's anticipation of our argument but with the fact that yet another set of amendments seeks to consolidate the Price Code, which is taking on all the stability and traditional appearance of the Albert Hall or the British Museum. In the long term that will be fundamentally damaging, because it deceives people about the

true nature of the situation that we face. The CBI has estimated that to abolish the Price Code altogether would add only 1 per cent. to the Retail Price Index. The highest estimate that I have seen is 2 per cent.—2p in the pound. Is it significant to have this bureaucratic machine in existence merely to achieve that benefit against the background of an increase in the rate of inflation 12 times as great? It distorts the market and the different prices of goods. Similar measures, such as subsidies, have had to be put into reverse. I refer to the subsidy on cheese because, despite denials at the time, consumption increased and it was necessary to reduce the subsidy to offset that.
There are other defects. Principally, the Price Code inhibits investment, especially investment in industry. Not only does it remove the retained profits which are traditionally the source of investment in industry but it actively discourages people from thinking that it is worth-while to invest their savings in industry.
In all those ways it has an effect. To tamper with prices distorts in other ways also, as the Chancellor of the Exchequer will no doubt find when he considers his Budget. Last year for the first time revenues from income tax amounted to more than half the total revenues. Corporation tax is down to under 8 per cent. and excise duties are also dropping. Therefore, there is distortion of the traditional balance in the economy because of constant tinkering.
To the extent that profit margins are kept down by the present recession and competition, the Price Code is clearly irrelevant. To the extent that the Price Code limits some profits, it is damaging in the long term. It is a short-term expedient—a political move which is damaging future employment prospects. Without a sufficient margin of retained profits, there will not be the investment that creates new jobs. We understand that the Secretary of State is in a tight corner. She recognises that prices must be allowed to rise to create the investment opportunities that, in turn, will lead to more jobs, but trade unions, the Cabinet and Labour Back Benchers are against any increase in prices, on dogmatic principle. That is a plight with which we have some sympathy.
However, with each successive amendment, the Code becomes increasingly


grotesque. It is not the finely-tuned, smooth-running, powerful machine in the fight against inflation that the Government wished it to be but a contraption of which, with each new device, Heath Robinson would have been proud.
The Code has been used, for example, to make a compulsory policy appear voluntary by the insertion of the sanction against employers last summer. It has been used on this occasion to make a compulsory price restraint scheme appear voluntary by the threat of the three-month interval, and it has been used, quite against the original conception, to allow prices to rise higher than they would otherwise have risen—all in the interests of a psychological strategy.
The next amendment which is brought before us should be the abolition of the Price Code. On that day I shall be prepared to welcome the Government's proposals.

10.46 p.m.

Mr. John Wakeham: The Order is cosmetic, but the Minister will be pleased to know that I shall not attack it on those grounds. It might have a marginal effect on the next round of wage negotiations, and if so, well and good.
My concern is more fundamental than that. My worries are extended because the scheme has a voluntary acceptance. It seems to be generally accepted, in the House and the country, that profit margins are too low and already threaten employment and investment and that there is no room for a further squeeze. My worry is that, unless and until industry is more profitable, we shall not get the investment we need for the economic performance that this country must have.
So my sad commentary on these proposals is not that they are bad or wicked or cosmetic. Cosmetics, I suppose, play their part in these matters. It is that low profits mean low investment. Since the scheme appears to be voluntary, I reluctantly conclude that all the sad tales that one reads about lack of investment intentions in industry are probably right. Under a Labour Government, industry does not want to risk investing because there is no confidence in the future. Those concerned say, "Why take risks? Why stick our necks out? Let us stick with a voluntary scheme and try to sur-

vive. This Government will give us no encouragement because they do not believe in profits or investment—or if they do, they dare not say so for fear of militant unions."
If the Government could look at their cosmetics again and find some way of persuading those who are against profits to encourage investment instead, that would be the best solution to our difficulties.

10.44 p.m.

Mr. Geoffrey Dodsworth: I want to draw attention to the collapse of the Government's policy on subsidies. We see tonight the evidence that the Government have learned the lessons of the debates on the Prices Bill in January 1975. We warned then that cash subsidies were an "up" escalator, that they were using cash to try to reduce increasing prices, and that that was a cost that they could not afford. So indeed it proved.
We said then that we were talking about limits of £1,700 million. It was then said that this was only a contingency level.
I want briefly to paint the picture of what took place in the Minister's Department. The reality was that there was a nudge. Somebody said "We shall get awfully short of money if we proceed with our subsidy arrangements as we planned. Let us look round for another way." Somebody else said "Why not let us dash off to the Treasury and have a chat with the chaps there? They are clever with figures and we shall probably get some expert advice on how to do our calculations." The Treasury, as is its wont, said "We have been doing this for years. It is called 'the rob Peter to pay Paul' system." That system has been outlined to us tonight. This system is designed to take from one section of the community and give to another.
My hon. Friend the Member for Gloucester (Mrs. Oppenheim) asked what will be the cost to the individual who pays increased prices. Are we to know exactly how much is involved? What is the quantum of the subsidy being paid to those on the restricted price product list? How are we to decide what are the items of special importance in family spending? We have decided to pay a subsidy from one consumer to another


consumer. We have decided to take it, not out of the taxpayer's pocket, but out of the housewife's pocket. We have decided that one consumer shall pay to another and that these consumers will never know how much it is.
If there were any merit, which I greatly doubt, in the proposals for food subsidies under the Prices Act, it was at least that we had some element of control, that we had some knowledge of the amount of money involved. In this method we shall never know exactly what is transferred from one area to another.
I admit that the scheme has the merit of being voluntary, but we must recognise that any method of this sort becomes increasingly complex as time passes. In the interests of equity and fairness, we are seeking more complex mechanisms in order to be fair to all.
Tonight we are witnessing the dismal failure of the Government's policies of subsidies, a recognition now that one consumer must pay for another directly through the shopping basket.
I recognise, in addition, that there are other parts of these proposals, namely those connected with investment relief. I point out that there is no proposal to increase the allowable amount of relief. I have drawn the attention of the House on previous occasions to the fact that 100 per cent. of investment may be deducted to arrive at the tax payable. Surely we can increase the allowance for "relevant expenditure" from 20 per cent. to, say, 25 per cent., at a time when investment is at an all-time low and unemployment is at an all-time high.
This was a unique opportunity for the Government to grasp the nettle and to do something practical and realistic as evidence of their intention to encourage investment. The opportunity has been missed. It may not recur. I ask the Minister to explain why the Government have failed to take the opportunity of increasing the level of investment.
On those two grounds I suggest that tonight we are presented with clear evidence of the Government's failure to recognise the needs of the consumer and of industry.

10.44 p.m.

Mr. Giles Shaw: I, too, express my regret at the fact that the Secretary of State is not present, though I fully accept the explanation of the Minister of State that it is not customary for the Secretary of State to witness the approval of a Statutory Instrument.
Once again I seem to appear in the role of tail gunner on this side. This short debate has been well worth while in bringing out some of the reasons why the Opposition feel so sceptical about this whole matter. I know that Ministers are disappointed that we have not all stood and cheered like the ranks of Tuscany at the unveiling of this superlative weapon in the fight against inflation. The Under-Secretary of State must allow us a little charade. The Secretary of State, with her new doctorate—which I assume is in metaphysics from the University of Louvain—is fully qualified to deal in a little public charade. It is a public charade in which we are engaged tonight.
To take up the point made by my hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth), these are complicated amendments to a Code which the Government told us on many occasions could not be amended in any substantial way prior to its dutiful expiry in January of this year. Yet here we are with the most major amendments. Additional clauses are being inserted. However, we are not varying the Code properly at the outset. Perhaps the Under-Secretary of State will cheer up when I acknowledge, as manufacturers have clearly done, that any measure which contributes towards the fight against inflation must be welcomed even by my hon. Friends and myself. Any measure of that sort must be welcomed in principle.
The amendments that we are discussing are seeking to bend the rules of the Price Code in the name of public relations. I do not have to crave the indulgence of the Under-Secretary of State. I merely have to quote the words of the Secretary of State. In her Press statement of 11th February she said:
So we set ourselves to introduce as quickly as circumstances allowed a scheme which would give the public a positive assurance that some degree of stability was returning, not


perhaps to all prices or even to all the most important prices, but to a wide range of the prices which are important in the expenditure of families. This is what the price check sceme aims to do.
That is a communication to the public that the Government believe that there are indications that the rate of inflation is slowing down. It is a public relations exercise. Let us establish that principle.
I welcome the arrival of the Secretary of State. The right hon. Lady will at least be able to listen to the closing speeches. It is fair to examine the Orders in the light of the right hon. Lady's statement, in the light of the objective of informing the public that prices are returning to stability, making some assessment of the cost in financial terms and in other lights.
I remind the Government that the general principles of the code were referred to by my right hon. Friend the Member for Crosby (Mr. Page). I refer the Under-Secretary of State to Statutory Instrument No. 2113, in which the Price Code is attached to the schedule. There were three general principles in the Code, which were

(a) to limit the extent to which prices may be increased on account of increased costs, and to secure reductions as a result of reduced costs;
(b) to reinforce the control of prices by a control on profit margins while safeguarding and encouraging investment;
(c) to reinforce the effects of compensation, and to secure its full benefits in the general level of prices."

Those were the principles around which the Price Code was to be enacted.
I concede that new paragraphs 79 and 79A are plumb along the line of the second principle, and especially welcome by my hon. Friends and myself. But new paragraphs 137 to 141 are clearly not within the first principle. They are concerned with the ability to increase prices where necessary, not to reduce them. They are clearly irrelevant to the second principle, which is about investment. The new paragraphs must relate to the third principle. I understand that by the "effects of competition" it is meant that the full benefit of competition in the market place is passed on, price levels being determined by demand.
These alterations will allow the Government to distort competition. Indeed, they provide powers for the distortion of competition and not to reinforce its natural effects. It was in this respect that my right hon. Friend the Member for Crosby and his Committee were so relevant. They pointed out that it provided a new range of intervention procedures in association with the Price Code—and, what is more, procedures which, in my judgment, are alien to the three principles outlined in the original instrument providing the guidelines for the Code.
The ways in which these competitive principles are now to work in seeking to promote certain price restraint lines will involve in consumer advertising terms £1 million over a period of six months or £2 million per annum—one of the fattest consumer appropriations in the market today. The promotion of price restraint in this way must have a disadvantageous effect on lines that cannot, for fully legitimate Price Code purposes, be included in the scheme. There are many lines which unfortunately cannot be included because the cost pressures are far greater than 5 to 6 per cent. Therefore, they are at a disadvantage not only because they cannot be included but because a Government effort, amounting to £1 million, will draw the consumers' attention to price restraint lines. In my judgment, that is yet another distortion of competition. I must ask whether that amounts to fair competition.
Secondly, there is a further distortion in terms of the enormous amount of cross-subsidisation to be encouraged by the new provisions. I appreciate that first Ministers have to be satisfied in this respect and, secondly, that they will look whether the cost pressures rise above the 5 per cent level. But we must expect that cost pressures will rise above the 5 per cent level, otherwise there is no point in having a scheme of this kind, and it might come to be known as "Operation Hoodwink". Therefore, one wonders whether cost pressures could frustrate the intention of the new provisions and involve cross-subsidisation.
I remind the Minister that fair competition does not, in my judgment, include permanent distortion of the price relationship between goods. What is involved is more than just the holding down of


certain lines and the allowing of the prices of other lines to rise disproportionately. However well this scheme will serve the average consumer, the fact remains that goods compete with each other, not only brand against brand within the market but often market against another complete market.
If help is to be given to the standard size loaf, what will happen to the purchasers of the small size loaf? What happens in the market for smaller size loaves if we have restraint versus restraint plus original-cost-plus? This is not the kind of distortion that can be turned over at the end of six months. It can have substantial long-term effects. If frozen peas are to be subject to price restraint, what happens to those who happen to grow beans or brussels sprouts or whatever the vegetable may be? The sales of restrained frozen products will escalate while the sales of the others will undoubtedly fall. Indeed, it may ultimately lead to shortages of certain products.
The Minister has embodied in the Code a major distortion of competition woefully against the principle around which the Code was originally built. Price distortion is not new and I accept that in many instances we have seen it working through the consumer market. However, when the Government introduce a scheme nominally to benefit consumers and when they talk about protecting low-income families, it should be made clear that some of the consequences of their actions may redound to the disadvantage of consumers and possibly result in prices being permanently inflated at levels which they would not have reached given the natural processes of competition.
Under the terms of Statutory Instrument No. 73, companies which supply returns to the Price Code are required to give separate and detailed information on price restraint lines. Is the Minister satisfied that the Price Commission is able to deal with the amount of detail which will be required if this measure is enacted? Does the Minister expect that there will be relatively few instances where certificates will be granted and that therefore perhaps the strain will not be great? I am sure the Minister knows of the extent to which the maintenance of detailed line-by-line records is a substantial drain upon manpower within in-

dustry. In my view, keeping records for six months over a wide range of consumer goods will add to industrial costs.
I must declare my interest in the chocolate and confectionery industry. As the Minister knows, chocolates and sweets are included in the price restraint scheme. I ask the Government, through the Secretary of State, how they can describe these products as being of "special importance"—I think that was the phrase used—to low income families and include them within the price restraint scheme but at the same time tax these products? This matter requires examination. If, in the right hon. Lady's judgment, these foods are of special importance perhaps she will convey her view to her right hon. Friend the Chancellor so that he may withdraw the VAT, or at least return it to the zero rate which applies to all food. Such action would make a 1 per cent. difference to the food index, at modest cost to the revenue.
Therefore, we have some serious questions to raise about the new distortions which have been included. I concede that in general if this measure helps to create a better climate in which wage negotiations can take place, it will have made a contribution. However, it cannot be held up as being an effective way in which to handle prices at the point of sale. Nor can it make a major contribution to the situation of the average consumer at the end of the six-month period. In the light of that, we are to be involved in a massive change to the Code and in methods which, in my judgment, will have long-term distortion as one of their side effects.

11.3 p.m.

Mr. Norman Lamont: This has been a useful debate. However, the Under-Secretary and the Minister of State will have to forgive my hon. Friends and me if we remain sceptical about the significance of the investment relief and of the alterations in the Price Code which are necessary to bring the price restraint scheme into operation.
I shall deal first with the provisions for investment relief. In our view these will make little difference to the amount of investment that will take place because of the present overwhelming depressing business background to the economy as


a whole. One cannot, towards the end of the operation of a relief, extend that relief for a few more months in the hope that it will have a dramatic effect upon the level of investment. As the Minister of State has acknowledged, these decisions are taken over a long period, which might mean three or four years, and therefore extending a relief for a few months will not make much difference.
Another objection is that investment relief is an extremely complicated matter and it is doubtful whether many industrialists can find their way around it. Above all, there is the point that was referred to by a number of my hon. Friends, particularly my hon. Friends the Members for Romford (Mr. Neubert) and Maldon (Mr. Wakeham). It concerns the uncertainty that is engendered about the future of price control. What will be the shape of Price Code Mark II? What will happen in July? That cannot be brushed aside with investment relief. The uncertainty is immensely damaging to investment. As long as the Price Code exists in its present form we cannot hope to see a significant rise in industrial investment. A number of hon. Members have dwelt on the harm that it is doing to profitability and investment. I very much agreed with the points made by the hon. Member for Newcastle-upon-Tyne, East (Mr. Thomas). I did not agree with his strictures upon my hon. Friend the Member for Gloucester (Mrs. Oppenheim), but I agreed with him about the effects on profitability and investment. He was right to draw attention to the effect upon margins—the fact that some manufacturing companies are operating at, perhaps, 40 per cent. of the level of profits at which, in theory, they could operate, and that under the Code the food industry is operating at less than 30 per cent. of its theoretical potential level of profitability.
The reasons for this have been mentioned in many of our debates. If a firm makes an investment that lowers its unit costs it is deprived of the benefit of that increase in productivity. Even if productivity is falling the productivity deduction is made. That has probably done more than anything else in the last six months to accentuate the shakeout in labour. That is why I particularly agreed with my hon. Friends about the effect of the Code on unemployment.
I should like to return to a point made by the Minister of State when he said that we could not have it both ways. The hon. Member for Newcastle-upon-Tyne, East made the same point. It cannot be said that the Price Code is damaging investment but not controlling prices. I acknowledge that there is a contradiction there. But that gives rise to a question we should like answered about the price check scheme. Is it actually controlling prices and damaging investment and profits, or is it purely a cosmetic exercise? We are in the dark about this matter. The Government will not come clean and tell us what sort of exercise this is.
A few weeks ago I got into hot water at Question Time when, rather rashly, before the scheme had been announced, I suggested that perhaps it was a bit of a fiddle with the retail price index. I was rebuked for that. The list has now been published and I see why I was so wrong. It is not a fiddle. It has very little impact on the retail price index. Far from being a fiddle, it might more aptly be described as a confidence trick. I do not mean that offensively. It might be a clever or justifiable confidence trick, but it is a confidence trick all the same.

Mr. Mike Thomas: I think that the hon. Member has misunderstood me, or I am misunderstanding him. He cannot have it both ways. He cannot say that the object of the exercise is bad because it damages investment, because that is to concede that there is a genuine element in the scheme, a by-product of which is to damage investment. If he says that it will damage investment he cannot claim that it is purely cosmetic. That is what I meant by saying that he could not have it both ways.

Mr. Lamont: I accept the logic of the hon. Member's argument. The Price Code, operating rigidly in the past two years, has had an effect on investment and employment. But which way will the hon. Gentleman's logic lead? Is the price check scheme, with its built-in amendments to the Price Code, merely cosmetic, or will it actually depress profits? Is it reducing prices? When I asked the Minister of State whether this was a scheme to reduce prices, or one simply to convince people that inflation was coming under control, he said that


it had an effect on prices because of the Dross-subsidisation element. That evades the point.
What is the effect on prices as a whole, after the cross-subsidisation has taken place? When the Minister, in replying, said that it gave people the assurance that there was at least an island of stability in the generally inflationary climate, we began to see what he meant. He meant that this showed that there were some prices that would not have gone up by more than 5 per cent. in the coming six months. That is why we have described this scheme as a cosmetic exercise.
The Minister let the rabbit out of the hat by saying that this was a scheme which would introduce an element of stability into the general inflationary climate. We have talked to some of the interests involved in the negotiations. We know as well as do Government Members that the prices of many of the items included in this list would not have gone up by more than 5 per cent. in the six months. That is how the list was compiled. That is why we think it is damaging. It is a scheme that will arouse false expectations. The public will not read the small print of the scheme. They will me misled by the propaganda—because at one time we were told that this scheme would cover about 25 per cent. of the cost of living of the average home.
We have long since gone away from that. We have long since seen that there are many other items that will go up sharply in the next few months. There was a sharp increase in rail fares only yesterday. They have risen by about 86 per cent. in two years. Commuter fares in the South-East are to go up by about 17½ per cent. We have the exclusion of electricity prices from the scheme, as referred to by the hon. Member for Newcastle-upon-Tyne, East. Electricity prices have almost doubled in two years. Food prices are going up faster than the general rate of inflation. Rates are excluded from the scheme. It is little wonder that many people will be sceptical about the scheme and wonder exactly what is the purpose of it. One will not be able to butter many parsnips with this thin list of items, and man cannot live by sliced bread and frozen peas alone.
My hon. Friend the Member for Pudsey (Mr. Shaw) referred to the cross-subsi-

disation element. Here again, when one considers the items of groceries included in the list one sees that this will be of little significance. The provisions for amending the Code will be of almost no significance, because on most items of grocery the percentage involved is so small. The whole idea of cross-subsidisation on small grocery items is of no significance whatever.
We do not want to attack the scheme, but we are sceptical about whether it will have any real benefit—whether it can do anything other than postpone inflation or load some price increases on to other goods. The one thing that it cannot do is to reduce the rate of inflation, despite the publicity, the Press conferences, the accounts of smoke-filled rooms and detailed negotiations with the CBI and the Retail Consortium, and the expectations that have been aroused. The scheme is mere window dressing. As such, it may do no great harm, but it certainly will not do any good.

11.14 p.m.

The Under Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): The hon. Member for Kingston-upon-Thames (Mr. Lamont), like some of his hon. Friends, oscillated uneasily between writing off the Price Check scheme as insignificant and condemning it for being positively damaging. Even after listening to the arguments tonight he has not been able to make up his mind which is the more powerful case.
The hon. Member for Gloucester (Mrs. Oppenheim) was in typical form tonight, with her usual brand of distilled negativism. She failed to deal constructively with the major problem of inflation. Although she ranged extremely widely, she did not offer positive suggestions about what should be done.
The hon. Lady complained about the absence from the debate, earlier, of my right hon. Friend the Secretary of State. Although my hon. Friend the Minister of State had fully explained why my right hon. Friend could not be here, and why it was unusual for Secretaries of State to take part in debates on Statutory Instruments, the hon. Lady chose rather pettily to devote a substantial part of the opening of her speech to the matter. She then gave the startling information that although the rate of inflation was falling prices were going up. If she can


point to any period in history when prices have not gone up she will deserve commendation. If she suggests that it would be desirable to return to the 1930s, we shall listen to that suggestion with amazement.
The cross-subsidisation proposals in the scheme were described by the hon. Lady as the neutralising factor, and a number of her hon. Friends returned to that theme. Her suggestion was that the cross-subsidisation provision in some way deprived the scheme of benefit, because she believed that it would offset any price savings that might be achieved by price restraint. The hon. Lady has failed to understand the current position of industry and the retail trade, which is surprising for such a devotee of the market. Certainly those in industry and commerce who gave their wholehearted support to the scheme from the beginning, and who reiterated that support in public when the agreements were concluded, have left no one in any doubt that they see little scope for cross-subsidisation in the present state of the market. If the hon. Lady really believes that this will be a major factor, she is sadly out of touch.

Mr. Giles Shaw: Is the Minister suggesting that it was the opinion of manufacturers that should costs rise beyond 5 per cent. on restrained lines they would not be able to recover the margin?

Mr. Maclennan: That is not the point with which I was trying to deal. The hon. Lady suggested that the price check scheme's value in restraining prices was offset by the cross-subsidisation provisions. That is a complete misunderstanding both of the market situation and of the purpose of cross-subsidisation, which is to enable the price check scheme to be extended to include items which it might not have been possible to include without some such provision.
The hon. Lady then considered the impact of the Code on investment. I thought that she produced the canard that it was inhibiting investment. Whatever may be or may have been the situation in respect of the Code's impact on investment when the Conservative Government introduced it and in the months thereafter, few industrialists would now consider that it was having the effect that the hon. Lady attributed to it. In-

deed, there are some encouraging signs that investment is beginning to turn around, and the investment intentions published by the CBI, the Financial Times and the Department of Industry show prospects for an increase in investment.
Whatever may be that situation, the inhibition of investment at present does not flow from the Price Code; it flows from the depressed condition of the market and the uncertain state of world trade. The hon. Lady must be as aware of that as anyone else. If she is so interested and keen to stimulate investment through the amelioration of the Price Code, it is odd that she has paid so little tribute to the investment relief provisions that have been introduced into the Code by my right hon. Friend and which have been substantially taken up, as was revealed in the last quarterly report of the Price Commission. This shows that no less than £1,806 million of investment has been forthcoming as a result of the utilisation of this relief.
The hon. Lady then went on to cry "Wolf" about what would happen after the price check scheme came to an end. She produced some figures, the origin of which I cannot guess at, to suggest that the retail price index would rise by 4 per cent. after July. That is a wholly erroneous prediction, based upon no official statistics. The hon. Lady's figure has no authority whatsoever. No Government have ever published official estimates of the possible effect on the RPI of abolishing the present price controls. There are far too many variables.

Mrs. Sally Oppenheim: Will the hon. Gentleman give way?

Mr. Maclennan: If I may finish the point, I shall give way—although, as the hon. Lady took so much time I do not have time to answer all her points, and she refused to give way to me.
So far as I am aware, there is no reason whatever for believing that the hon. Lady's alarmist figures have any substance.

Mrs. Sally Oppenheim: I am grateful to the hon. Gentleman for giving way. This is clearly on the record in the words


of the Secretary of State herself, as recorded in Hansard for 28th April 1975, when the right hon. Lady said:
What we can say clearly is that the annual rate of increase, where there are neither food subsidies nor a Price Code, would be about four or five points higher."—[Official Report, 28th April 1975; Vol. 891, c. 18.]

Mr. Maclennan: That was in an entirely different situation, at a point in time when the market was depressed, and when competition was substantially less effective than it will be in the months ahead. It was in an entirely different scene. That was not a prediction; it was a statement related to a particular point in time, and it had nothing whatever to do with any future abolition of the Price Code.
The hon. Lady complained—this was a serious point, and it was taken up by the right hon. Member for Crosby (Mr. Page)—about the list not being published. It was a somewhat different point that the right hon. Member for Crosby was making. The hon. Lady complained that the list of items on which cross-subsidisation might take place had not been published. The fact is that a much more general requirement has been expressed by my right hon. Friend, to both the Retail Consortium and the CBI, that the basic household necessities which are not included in the scheme ought not to be the subject of cross-subsidisation. By way of example, my right hon. Friend specifically mentioned in her letter that forms part of the agreement with the CBI and the Retail Consortium, some of the subjects mentioned by my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Thomas)—butter, cheese, all items of children's clothing, and footwear. The Retail Consortium, the CBI and the trade associations have undertaken to observe that request.
The hon. Lady made some remarks about the knitwear industry, on the basis of an article in the Daily Telegraph and quotations from the trade association. That report stemmed from a misunderstanding that has now been corrected. Some lines of clothing, including some knitwear, are included in the scheme as the result of an undertaking given by the Scottish Knitwear Association and a number of companies which are not members of the Association.
The hon. Lady concluded by referring to a quotation by Frances Cairncross that when price controls were really biting, the United Kingdom had its highest rate of inflation. That is almost a truism. When the rate of inflation is at its height the need for price controls is most acute. It was something of a dying fall for the hon. Lady to sit down with that quotation.
My hon. Friend the Member for Newcastle-upon-Tyne, East made a thoughtful and constructive speech, as usual, and referred particularly to the impact of oil prices on inflation, the undercapacity in industry which leads to inflation of unit costs, and the value of the pound. These are all valid points. They make it impossible for us to extend the scheme to items that many of us would like to include. My hon. Friend mentioned electricity prices, but recent oil price increases have made it impossible to include electricity prices in the nationalised industries contributions to the scheme.
It is important to realise that 30 per cent. of consumer expenditure in the nationalised industries has been brought within the scheme. The Post Office has been taken to task in the debate, but the items it has included in the scheme form by far the largest part of consumer spending with the Post Office. The exclusion of parcels accounts for only 0·2 per cent. of the RPI.
The debate has been worth while. It has revealed a shift in the attitude of the Opposition from outright hostility to a kind of grudging acceptance that the scheme might conceivably have a useful effect on the present difficult situation. However, the Opposition have still not grasped the essential feature of the scheme—that industry and the retail trade have got together with the Government and agreed to hold prices on a substantial range of goods—amounting to 20 per cent. of consumer expenditure. They have done this because the counter-inflation policy of the Government is working and because they are able to see the costs in the pipeline which they will have to bear. They are prepared to bring forward the savings to the consumer which they anticipate can eventually be made as a result of the universal adherence to the pay policy agreed


at the beginning of August. This is a novel and remarkable agreement.

Question put and agreed to.

Resolved,
That the Counter-Inflation (Price Code) (Amendment) Order 1976 (S.I., 1976, No. 71), a copy of which was laid before this House on 22nd January, be approved.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Snape.]

SPORT AND RECREATION

11.30 p.m.

Mr. Neil Macfarlane: I am pleased that the Adjournment procedure has enabled me to raise a matter which, sadly, has not been allocated parliamentary time in the present Session. I apologise in advance if my voice gives out because of a seasonal malady. It is fortuitous timing that my ballot was successful on the day following the visit of the Central Council for Physical Recreation to Downing Street, and to the House of Commons to visit an all-party delegation.
It is a disappointment to many hon. Members on both sides of the House that the White Paper on sport and recreation has not yet been debated, although it was published in August 1975. There are many proposals in that document that should be debated. That is why I raise this topic tonight. I hope that through the customary channels the Minister will be able to tell the Leader of the House that the Opposition are seeking a debate on the subject as soon as possible. Many of us have signed a motion to that effect.
The White Paper is a far-reaching document, which talks about principles of policy, a programme of action, the Sports Council, the Countryside Commission, the tourist boards, the Forestry Commission, the water authorities, the British Waterways Board, ancient monuments, historic buildings, the Nature Conservancy Council, local authority co-ordination, the resources of recreation, management and the youth sports programme.

I approach the debate with the object of looking to the future in the hope that the sporting fraternity will be encouraged to know that we are debating the subject in this Chamber. I am sure that the Minister will respond with his customary magnanimity and welcome the debate with a constructive, forward-looking approach.
The big cry, and the biggest problem facing sport and recreation, is the problem of money and sponsorship. We are all aware of the financial stringency that faces the United Kingdom. I shall return to that aspect. There can be no argument between the Opposition and the Government about the importance of sport and recreation in our society. The stresses and strains of life in the 1970s, and the problems of unemployment among the young people leaving school are key factors which make it essential that the Government and the sports bodies should undertake a thorough and urgent reappraisal of taxation and the way in which our resources are currently being spent on sport and recreation.
I urge the Minister to remind his right hon. Friend the Chancellor of the Exchequer of the amount of money that sport receives from the Government—about £10 million, compared with £26 million for the arts. I do not want to reduce the amount spent on the arts, but, with more and more people participating in sport and recreation, I am sure that there can be no argument between the Minister and myself about which activity has the greater following. The way in which Arts Council money is spent in future will be under severe scrutiny, in view of the recent purchase of some firebricks. The amount of money spent on that purchase, which is being played very close to the chest of those who spent it, may never be known to the public.
More than £35 million a year is taken out of sport by the Treasury in a variety of taxes, and more than £40 million is injected back in through local authorities. The £35 million is taken in VAT, local rates and corporation tax. I hope that the Minister will point out to his right hon. Friend the Chancellor of the Exchequer that if tax concessions were to be made in amateur sports we should fall into line with other European nations.
I have no doubt that the Minister, with his long experience of sport, would be the first to recognise that Germany, for example, exempts sport in youth and welfare organisations, and that only 5.5 per cent., which is below the standard rate of value added tax in Germany, is charged on swimming pool admissions. France exempts big participation sports like basketball, hockey, skiing, judo, handball, and canoeing. Denmark charges VAT only when professionals are taking part. Generally, sport is at a lower rate of taxation on the Continent. It is the same in other English-speaking countries—Australia, New Zealand, Canada and the United States. Although their taxation principles are different, they none the less charge a lower rate of standard federal or state tax.
If the Treasury were to lower the rate of tax on certain sporting activities, the financial benefit would be enormous, as I am sure the right hon. Gentleman will agree, and those sporting centres of excellence which are so near and dear to his heart would perhaps become a reality in this country. The inconsistencies that we have in taxation on sport are well highlighted by the fact that we have a 25 per cent. VAT rating on water sport recreation. It may well be that the Chancellor, in applying the increase he imposed in 1975, was looking at the boating fraternity on the South Coast of England and in the south of France. Nevertheless, he has affected 800,000 canoeists and boating enthusiasts in this country, and it is a depressing and sobering thought that 42 per cent. of the money collected through the Olympics appeal will be taken out by taxation.
If concessions were made by the Chancellor in his forthcoming Budget, we might be able to train our great champions of recent years, like John Curry, David Hemery and Brian Wilcox, who now have to train overseas.
I am not one of those who criticise our lack of amenities, because we have excellent centres, the most recent being Holme Pierrepont, providing one of the finest water centres in the country. We have facilities and centres, but we want the injection of more money. Here I pay tribute to the right hon. Gentleman, who was largely instrumental in getting Holme Pierrepont going.
I remind the right hon. Gentleman that the volunteer in sport and recreation has also been affected. The volunteer worker has to catch a train, have meals away from home, and spend two or three days away supporting a sport on a voluntary basis. His pocket has been hit badly in recent years. I hope that the right hon. Gentleman will convey to the Chancellor the fact that the volunteer is of considerable importance to sport and recreation.
I remind the right hon. Gentleman also that sport has profited considerably from commerce and industry's sponsorship in recent years. We want more sponsorship—of that there is no doubt—but there must be companies whose profits at this moment are shrinking and whose chairmen or finance directors feel, when they look at their balance sheets, that their companies cannot afford to go on with sports sponsorship. Such sponsorship has declined by 15 per cent. this year as compared with the previous year.
Will the Minister point out to the Chancellor that tobacco companies have provided well over £12 million for sport sponsorship in recent years? If that and other money were to be lost there would be a serious decline in the amount of sponsorship. I hope that the Minister will not dismiss the importance of sponsorship. I hope that he will not dismiss the importance of the level of support being maintained, or the necessity for the Government to consider and prepare contingency plans in readiness for any fall-off in sponsorship.
There is also a fall-off in television fees. The BBC and the IBA are having to make necessary cuts, but I think that the BBC is still providing a superb sporting service to the nation. It certainly covers all sporting events remarkably well.
I turn next to the development of the so-called sport and leisure centres. There is no doubt that the recent development programme has considerably assisted the quality of life in the community. But many hon. Members on both sides of the House, through the all-party sports group, are concerned that we are pouring too much money into the wrong slot. I may be wrong in saying that the emphasis in many of these centres is not so much on sport and recreation as on leisure activities. That is fine, by my reckoning, so long as we recognise that more external


sports facilities are required. The Gates-head project, admirably sponsored by that local authority and admirably led by Brendan Foster, is the kind of outdoor activity that the nation requires.
I have the feeling that the leisure centres do not necessarily attract the individual, whereas the external atmosphere of the athletic tracks, the cross-country parks, the team game pitches and the kick-about areas—which the Minister highlighted in his White Paper—provide more of a genuine sports atmposphere than do the enclosed confines of the large multi-purpose gymnasium with, perhaps, smaller rooms adjoining for a variety of activities that are generally of a specialist type. I shall be keen to hear whether the Minister is satisfied with the advice being given by the Sports Concil to local authorities on the design, specification and layout of these centres and the all-important question of the emphasis that he wants to see. That is another problem affecting sport and recreation. It needs investigating before we waste any more money on too many of these projects.
An additional problem facing sport and recreation is that of organisation. I shall be eager to hear the Minister's views on my ideas. The longer-term question is whether sport, recreation and the Arts should be combined in one Department. That has been developed successfully in France. I am certain that the right hon. Gentleman would be happy if he could sit at the Cabinet table and speak for those subjects.
I have an unhappy feeling that sport and recreation have been relegated to a rather lowly position in a large and cumbersome Department of State. Many committees and working parties have been set up in the last 12 months with the best of motives, but I am concerned that that may indicate the Minister's general lack of confidence in the external organisations through which the Government operate.
The final problem concerns the youth and sport programme. There is a disturbing element here. The school leaver is not encouraged to integrate into the local sporting fraternity. I should be grateful if the Minister would develop on the letter that he wrote to me on 11th February outlining his hopes and objectives for the youth and sport programme.
I am concerned about the revised responsibility for youth. I understand that the responsibility has now been transferred from the Home Department to the Department of Education and Science, of all things, and that the Minister responsible for the arts is now in charge.

Mr. Denis Howell: That has always been so.

Mr. Macfarlane: Not always. I understand that it was transferred from the Home Department. Perhaps the Minister will confirm that later, with greater clarity instead of from a sedentary position.
The problem of co-ordinating youth policy is critical. I understand that the Minister responsible for the arts is now also responsible for the youth programme, yet the Minister responsible for sport and recreation writes about it in the White Paper. May I have clarification on that matter?
Is the right hon. Gentleman directing the Department of Education and Science into positively encouraging local education authorities to open some of their splendid new comprehensive school sports gymnasiums for evening sports and recreation activities, and their fields, in the spring and summer, for outdoor activities? If there is any concern about paying for their use, I suggest that a nominal charge could be made at the door for everybody entering.
It would be interesting to know whether the Minister is satisfied with the way in which the Football League is responding to his requirement for the outlining of safety precautions at football grounds.
We want to debate many matters. I hope that the Minister will relay to his right hon. Friend the Leader of the House the urgent need for a debate on the White Paper and on other matters that I wanted to raise this evening.

11.45 p.m.

The Minister of State, Department of the Environment (Mr. Denis Howell): I have rarely heard such a collection of grouses and bromides in a 15-minute Adjournment speech as I have tonight. This Adjournment debate, which is extraordinary—there are 12 matters that I must raise—is an apology for the nonsense being talked by the Opposition both in their


handout, when they met the CCPR yesterday, and also in Early-Day Motion No. 18 in which they demand time for a debate.
No one would like time for a debate on these matters more than I, because they need time to be deployed. However, who has the time in this House? The Opposition have the time. They have the Supply Days. The Government bring forward legislation.

Mr. Macfarlane: The Government have the time, too.

Mr. Howell: If you object to my interjecting from a sedentary position, you must not do it yourself.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order.

Mr. Howell: I was not referring to you, Mr. Deputy Speaker. The hon. Member for Sutton and Cheam (Mr. Macfarlane) criticised the Government for the low priority that they give to sport and recreation. It is astonishing that the hon. Member and the Opposition spokesman on these matters—the hon. Member for Dumfries (Mr. Monro)—have 15 minutes in which to raise this matter and cannot find half a Supply Day. That puts the matter into perspective.
I have no doubt that this debate is all part of a political ploy by Conservative Central Office. It would be useful to sport if the Tory Central Office got its fact right. In the handout it claimed that
Maximum opposition was given last year to the 15 per cent. VAT rate.
In fact, the rate is 25 per cent., not 15 per cent. If the Government are to be castigated, let us be castigated for all our sins, not for half of them.
A further illustration of the growing irresponsibility of the Conservative Party in these matters is the statement that
We are pledged to abolish rates.
If it believes that anyone in sport will be taken in by that sort of nonsense, it has a duty to tell us how it expects sports clubs to pay for the services that local authorities provide. All those services have to be paid for and if they are not paid for through the rates, they are paid for in another way. I am in favour of these contributions from the Conserva-

tive Party, but I hope that Conservative Members will do more homework.
I am glad that the hon. Member for Sutton and Cheam wants a debate on the White Paper. The White Paper denies the assertion in the Early-Day Motion that the Government give sport and recreation a low priority. This is the first time that any Government have published a White Paper on the future philosophy and policy of sport and recreation. The importance of it was underlined by the catalogue of subject headings which the hon. Gentleman kindly read out, for which I was grateful. It shows the breadth and depth of Government thinking and policy. It underlines the point that we should debate these matters in greater detail. In the last month we have also published a circular replying to the Sandford Committee setting out our considerations on the future of national parks policy. As I recently announced, having established a policy for sport, recreation and national parks, we shall issue a series of consultative documents—we hope later this year—on the whole of countryside policy and the way in which it develops.
I think that I can claim, therefore, that in the two years since we returned to office and I have been back doing this job there has been more activity, more new thinking, policies and initiatives, than for many a long day. We can take some satisfaction in that, but I am not complacent. I do not believe that the simple issuing of statements of policy and White Papers leads to implementation. We must follow them up.
It is impossible to make direct comparisons between sport and the arts. The Government's contribution, through local authorities, to sport and recreation far outweighs their contribution to the arts, but I recognise that the Sports Council, the Central Council for Physical Recreation and other bodies probably draw more parallels than our Treasury friends would.
It is difficult, in the middle of an economic crisis, to suggest that much more money will be available from the Chancellor of the Exchequer. That would be totally dishonest. However, part of the terms of reference of the Royal Commission on Gambling was that it should give priority consideration


to the contribution that gambling could make to the financial health of sport as a whole. The Royal Commission is charged with producing an interim report on that specific subject.
That means, in shorthand, that the Government accept that sport needs more money. At a time when it is unrealistic to expect it from the Treasury, we are not being complacent. We are looking for other avenues for assisting sport.
I am sorry about the 25 per cent. VAT rate—indeed, about VAT in general, but it was the hon. Gentleman's Government who imposed it on sport. I voted against it at the time. The then Opposition spokesman on sport actually went into the Lobby to impose it. I do not make a political point, but since the hon. Gentleman raised the matter it is right to point out where the original sin lay.

Mr. Macfarlane: The House will note that the Minister is not making political points, but those who read Hansard closely will make their own deductions. Does he not agree that when VAT was introduced, the Labour Party in opposition promised that it would not be imposed on sport?

Mr. Howell: Not at all. We voted against its imposition, but made no pledge about its abolition. We voted against the imposition of VAT on sport and the arts, but we are now saddled with a whole VAT and taxation system. It is no good referring to the amount of money that the Chancellor takes from sport. That is not the basis on which we conduct our taxation policy. From a variety of sources, taxation goes into a common pool. The hon. Gentleman's argument, which is technically known as the hypothecation of taxation argument, went out with Lloyd George's Road Fund, which was specifically designed for the building of roads. Since Lloyd George and his Road Fund disappeared down the sinks of history, it has not been possible to advance that argument.
The hon. Gentleman has made the same mistake over the Olympic appeal. He said that 42 per cent. of the money has to go in taxation. It is paid in corporation tax, because the money comes from a trading operation. If someone persuades petrol companies to

contribute ½p for every gallon sold, that is a trading operation.
If petrol company A were persuaded to do that and it were not charged corporation tax, it would be grossly unfair on petrol companies B and C. What the British Olympic Association and other sporting associations should do is to persuade people who generously donate to the Olympic fund also to pay the corporation tax. If the donation were paid after tax had been paid on it the problem would not arise. Therefore, the hon. Gentleman is on a false point.
I am glad to be able to reassure the hon. Gentleman about tobacco sponsorship. The Government have made it clear that there will be no interference in tobacco sponsorship of sport. I shall soon be seeing the tobacco companies with a view to arriving at a code of advertising conduct which the companies, I am confident, will be happy to enter into with me—I know that such a code will have the hon. Gentleman's blessing—so that the importance of sponsorship can be seen by everybody.
I certainly support the sponsorship of sport. During a temporary absence from the House I was Chairman of the Central Council for Physical Recreation. In that period I was able to create the Sponsors of Sport organisation.
I am in favour of leisure centres. I cannot understand the hon. Gentleman's suggestion that we might be wasting money by having too many of them.

Mr. Macfarlane: I meant on design.

Mr. Howell: I do not think that we are wasting money on design. The Sports Council has a technical unit dealing with design. I hope that every local authority that provides recreational leisure centres will consult the Sports Council, because there is much expertise there.
Two things need to be stressed to local authorities in this respect. First, if they are thinking of not proceeding with leisure centres they would do well to realise that there is a direct relationship between the failure to provide such centres for young people, where they can enjoy sport and relax, and the delinquency and vandalism that occur in some neighbourhoods. Secondly, I hope that in


this period of economic stringency local authorities will resist the temptation to price ordinary working youngsters out of their leisure centres. I know that it is a difficult situation for local authorities, but if they price youngsters out of leisure centres the social effects will be very damaging.
As for the Centres of Excellence and the Sports Aid Foundation, I am glad to report that two of the proposals in my White Paper for dealing with the training of top-class international sportsmen and sportswomen are going well. Over 20 universities and colleges have intimated their willingness to take part in the scheme. This week the Sports Aid Foundation announced the first list of bursaries for people who, we hope, will be competing with distinction at this years Olympic Games in Montreal. The long-term benefits of the Sports Aid Foundation will be seen over the next four years, leading up to the Moscow Olympics in 1980.
Youth sports programmes are vitally important. From 1964–69, when I was Under-Secretary of State for Education, I was the Minister in charge of the youth service. Therefore, I know that the

youth service has always been in the Education Department—and it still is. My programme is not a youth programme; it is a youth sports programme. The biggest setback that the youth service suffered was when the present Leader of the Opposition became Secretary of State for Education and Science and cancelled at a stroke the policy for youth and community work in the 1970s, which I had worked and fought for.
The last point concerned safety at football grounds. I am glad to report that things are going well. The Home Secretary will make the first Orders early next year. I have every confidence that Football League clubs will be able to keep their clubs in order. Under the new scheme that I announced to the House, of a 10 per cent. levy voluntarily paid from the "spot the ball" competition——

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Twelve midnight.